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minal Appeal No. 189 of 1967.
Appeal by special leave from the judgment and order dated September 4, 1967 of the Madhya Pradesh High Court in Criminal Appeal No. 492 of 1964.
A.S.R. Chari, B.P. Maheshwari and Sobhag Mal Jain for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
In this appeal by special leave the principal question which arises is whether a Sales Tax Inspector inspecting the accounts under the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959) hereinafter referred to as the Act is entitled to remove obstruction to the inspection of account books; in other words, if he attempts to remove the obstruction is he acting in the execution of his duties as such.
The facts are not in dispute.
On October 24, 1959, Krishan Sahai, Sales Tax Inspector, P.W. 1, alongwith Shri N. J. Warudkar, P.W. 5, and Shri Harikishan Gupta, P.W. 2, went to the shop of the appellant Mangat Rai, run under the name and style "Mangat Rai Ram Kumar".
The officer visited the shop for a surprise check.
He informed the appellant that he wanted to inspect his account books.
At that time they were in the verandah which is common to the shop of the appellant and the neighbouring shop of Munshiram.
It is perhaps best to describe what happened in the words of the Inspector: "I entered the shop of the accused for inspection and Shri Warudkar entered the shop of Munshiram.
The accused, Harikishan and myself all three entered the shop of the accused.
I and Harikishan sat on the Gadi of the accused and the accused Mangat Ram sat near the iron safe.
I asked the accused person to show his account books for inspection.
Many account books were kept there.
He took out 3 note books of the size of exercise notebooks out of them.
I thought he was taking out them for showing the same to me for inspection.
In the meantime Dayakishan who is the son of the accused also came into the shop.
The accused kept one notebook as it was and he handed over the remaining two note books to his son and asked him to rule away for keeping the same at his house.
When the accused was turning the pages of the note book I noticed that it contained accounts therefore, suspicion came to my mind and I demanded these note books from that boy for inspection.
That boy had the exercise book in his right hand.
I tried to snatch away the exercise book by catching hold of 153 his left hand.
When I had caught hold of that boy with my left hand the accused caught hold of my right hand and pulled me to the back side by giving me a jerk as a result of which my shirt got torn and the boy ran away.
I tried to get separated from the grip of the accused so that I would be able to catch the boy but in the mean time the accused caught hold of my waist with his both the hands and said, "Do not touch the exercise books.
It would be dangerous.
" In cross examination it is stated: "When the accused was turning the pages of both the account books with which the boy was running away "I noticed that 'Business transaction ' was written therein.
" The Magistrate who, tried the: case convicted the appellant under section 353 and under section 506(1) of the Indian Penal Code.
The learned Sessions Judge held that the Sales Tax Inspector "had not required the accused to produce those copy books for checking and inspection and as he was not authorised to seize them, his attempt to hold the boy and relieve him of the copy books was not in the discharge of his public duty and therefore the accused cannot without doubt be held guilty of an offence under section 353 Indian Penal Code or even 352 Indian Penal Code.
" The State filed an appeal under section 417 of the Criminal Procedure Code.
The High Court came to the conclusion that the Sales Tax Inspector was certainly within his statutory authority to demand inspection of the copy books kept in the shop and if some of the books were sought to be removed in such clandestine manner, it would be idle to contend that the Sales Tax Inspector would have no power to prevent evasion of inspection and commission of an offence in his very presence.
In the result the High Court allowed the appeal and convicted Mangat Rai under section 353 and section 506(1) and sentenced him to rigorous imprisonment for four months on each count, the sentences to run concurrently.
The learned counsel for the appellant, Mr. Chari, contends that the Act contemplates voluntary submission to inspection and that there cannot be any forcible inspection of accounts.
He says that if there is any obstruction to inspection it may be punishable under section 46(h) of the: Act, but the Sales Tax Inspector cannot do anything to forcibly inspect the accounts.
He urges that what has happened in this case is an attempt on the part of the Sales Tax Inspector to exercise the powers under section 29 (3) of the Act, and it is common ground that the Sales Tax Inspector did not have power to act under section 29(3).
Sup CI 70 11 154 In order to appreciate the arguments of the learned counsel it is necessary to set out the relevant provisions of the Act and the Rules.
"Madhya Pradesh General Sales Tax Act section 29.
Production and inspection of accounts and documents and search of premises.
(1)The Commissioner may, subject to such conditions as may be prescribed, require any dealer to produce before him any accounts, registers or documents, relevant to the financial transactions of a dealer including accounts, registers or documents relating to profits derived from the business of any firm, or to.
furnish any information, relating to the stock of goods of the dealer, or purchases, sales or deliveries of goods made by him, as may be necessary for the purpose of this Act.
(2) All accounts, registers and documents relating to the stocks of goods of any dealer, or to purchases, sales or deliveries of goods made by him and all goods kept in any place of business or warehouse of any dealer shall, at all reasonable times, be open to inspection by the Commissioner.
(3) If the Commissioner has reason to suspect that any dealer is attempting to evade payment of any tax, he may, for reasons to be recorded in writing, seize such accounts, registers, or documents of the dealer as he may consider necessary and shall grant a receipt for the same, and shall retain the same only for so long as may be necessary for examination thereof or for a prosecution.
(4) For the purpose of sub section (2) or subsection(3), the Commissioner may enter and search any place of business or where house of any dealer." "Madhya Pradesh General Sales Tax Rules 54.
Notice of inspection.
Unless the inspecting officer in his discretion deems it necessary to make a surprise visit, he shall give reasonable notice in writing to the dealer of his intention to inspect the accounts, registers, documents or stocks of goods of such dealer and in fixing the date, time and place for the purpose 155 shall, as far as possible, have due regard to the convenience of the dealer.
Retention of seized books of accounts, registers and documents.
If the inspecting officer seizes any books of accounts, or documents under section 29, he shall give a written acknowledgement of the same specifying in brief the articles so seized.
He shall not without recording in writing the reasons retain them for more than twenty one days.
" A similar section was construed by this Court in Commissioner of Commercial Taxes vs Ramkishan Shrikishan Jhaver(1).
The section which came up for interpretation was section 41 (2) of the Madras General Sales Tax Act (1 of 1959), which reads as follows: "41(2).
All accounts, registers, records and other documents maintained by a dealer in the course of his business, the goods in his possession and his offices, shops, godowns, vessels or vehicles shall be open to inspection at all reasonable times by such officer: Provided that no residential accommodation (not being a place of business cure residence) shall be entered into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this sub section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure, 1898 (Central Act 5 of 1898).
" The contention of the respondent in that case was that the provisions did not authorise search of premises but merely provided for inspection thereof at all reasonable times by the empowered officer.
This Court observed: "Though, therefore, the word 'search ' has not been used in sub section (2) these two powers of entering the offices, etc., for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer 'concerned the powers to enter and search the offices, etc., and if he finds any account in the offices, shops, etc., to inspect them.
Otherwise, we can see no sense in the legislature giving power to the empowered officer to enter the offices, etc., for the purpose of inspection as the officer concerned would only do so for the purpose (1) , 671.
156 of finding out all accounts, etc., maintained by the dealer and if necessary to inspect them for the purposes of the Act.
We cannot therefore agree with the High Court that there is no power of search whatsoever in sub section (2) because the sub section in terms does not provide for search.
Similarly, the officer has been given the power to inspect the goods in the possession of the dealer.
He has also the power to enter the dealer 's offices, etc., for the purpose of such inspection.
Combining these two powers together it follows on the same reasoning that the officer has the power to search for the goods also and to inspect them it found in the offices of the dealer.
We have therefore no hesitation in coming to the conclusion that the power of search is implicit in subsection (2) with reference both to the accounts, etc.
maintained by the dealer and the goods in the possession of the dealer.
" We have referred to the above case, which was not cited at the bar, in order to show that there is no rule that provisions like this should be construed very strictly.
In the present Act there is a special provision section 29(4) which enables the Commissioner to enter and search any place of business or wherehouse of any dealer for the purpose of sub section (2) of section 29.
If the powers under sub sections
(2) and (4) are read together it would mean that the Commissioner is entitled to search for the account books even if the assessee does not place the account books before him.
If the Commissioner searches and takes hold of account books for the purposes of inspection it is difficult to say that he is seizing the account books within the meaning of sub section
(3) of section 29.
Search for inspection implies taking possession of the account books for the purpose of inspection.
In the Act 'seizure ' means something different because here seizure means that the Commissioner would take into possession the account books and take them outside the possession of the assessee.
The learned counsel referred to us the decision of this Court in Hazari Lal vs State of Bihar(1), where this Court observed: "In our opinion merely holding books found lying in the premises for perusing them cannot properly be regarded as seizure because seizure implies doing something over and above holding an article in one 's hand.
According to Shorter Oxford Dictionary, seizure, among other things, means ' . confiscation or forcible taking possession (land or goods); a sudden and forcible taking hold. ' As already stated, Mr. Singh (1) [1963] Supp. 1 S.C.R. 419, 425. ? 157 merely picked up the books which were lying in the shop and did not snatch them away from anyone nor did he take them by force.
On the contrary they were taken away by force by the appellant.
If, indeed, he had retrieved them by force it may have been possible to urge that latter act of his amounts to seizure.
" In our opinion the last sentence quoted above is an abiter, and we must examine the question independently whether the attempt made by the Sales Tax Inspector in this case to take possession of the account books from the hands of the appellant 's son amounts to seizure or does it amount only to an attempt to enforce his right of inspection.
It seems to us that if we were to accept the contention of the learned counsel for the appellant we would be nullifying the power of inspection and search contained in section 29(2) and (4) of the Act.
Any assessee who does not want to show any particular book or if he finds that the Sales Tax Inspector has got hold of a book, which might prove damaging to his case, the assessee could snatch away or ask his clerk or son or relation to snatch away the book and run away leaving the Sales Tax Inspector helpless to do anything in the matter.
In our view the Sales Tax Inspector having seen the two books in the hands of the assessee was entitled to demand that they be shown to him and if he did forcibly try to take possession of them it cannot be said that he attempted to seize the account books within the meaning of section 29(3) for the object was not to dispossess the trader but to hold the books for a temporary period for the purpose of inspection.
If section 29(4) authorises him to search business premises for the purpose of inspection it implies that he can get hold of the books in respect of the business of the assessee.
As observed by this Court in M.P. Sharma vs Satish Chandra(1) these powers are given to the Sales Tax Inspector for the protection of social security.
This Court observed that "a power of search and seizure is in any system of jurisprudence an overriding power of the State for the protection of social security and that power is necessarily regulated by law." The learned counsel urges that the appellant was entitled to exercise his right of private defence of the person of his son.
We are unable to sustain this contention.
The son was clearly committing an offence under section 46(h) of the Act and in these circumstances we are unable to appreciate how any question of private defence arises.
(1) ; ; 1096.
158 In our view the Sales Tax Inspector was acting in execution of his duty as a Sales Tax Inspector and the appellant used criminal force against the Sales Tax Inspector.
Further he intended to deter the Sales Tax Inspector and prevent him from discharging his duty as a public servant.
In the result the appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.

Output:
Section 29 sub section (2) of the Madhya Pradesh General Sales Tax Act provides in part that all accounts relating to the stock in trade of any dealer shall be.
open to inspection by the Commissioner; and for this purpose sub section (4) empowers the Commissioner to search any place of business of the dealer.
The Sales Tax Inspector visited the shop of the appellant fox a surprise check and wanted to inspect his account books.
When the Inspector tried to prevent removal of the books in a clandestine manner by forcibly taking possession of them, the appellant used criminal force and was subsequently convicted under sections 353 and 506(1) I.P.C.
In appeal to this Court it was contended that the Act did not authorise forcible inspection of accounts and that the Inspector was exercising powers of seizure under section 29(3) of the Act which he did not have.
HELD: Dismissing the appeal, If the powers under sub section (2) 'and (4) are.
read together, it would mean that the Commissioner is entitled to search and take hold of the account books even if the assessee does not place the account books before him.
If the Commissioner does so, he cannot be said to seize the account books.
In the Act "seizure" means that the Commissioner should take into possession the account books and take, them outside the possession of the assessee.
[156 E G] In the present case the Sales Tax Inspector having seen the account books in the hands of the assessee was entitled to demand that the account books be shown to.
him and if he did forcibly try to take possession of them, he was only attempting to enforce his right of inspection.
He cannot be said to have attempted to seize the account books within the meaning of section 29(3), for, the object was not to dispossess the trader but to hold the books for a temporary period for the purpose of inspection.
[157 E F] The observation contra in Hazari Lal vs State of Bihar [1962] Supp. ?.
S.C.R. 419 at 425, held obiter, Commissioner of Commercial Taxes vs Ramkishan Shrikishan Jhovar , 671 and N.P. Sharma vs Satish Chandra ; ; 1096 referred ' to.


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Civil Appeal Nos.
11431144/73 and 1201 (N) of 1973.
From the Judgment and order dated 16 11 1972 of the Delhi High Court in C.W. No. 580/71, LPA No. 58/72 and 54/72.
P. N. Lekhi and M. K. Garg for the Appellants in C.A. Nos.1143 44/73 and for Respondents in C.A. No. 1201/73.
F. section Nariman P. D. Singhania, Homi Ranina, Ravinder Narain and T. Ansari in C.A. No. 1143/73 for the Intervener.
section N. kaeker Sol.
General and A. V. Ramgam for the Respondent in C.A. No. 1144/73 and for the Appellant in C.A. No. 1201/73.
section N. Kaeker, Sol.General, B. P. Maheshwari, section Sethi, Bikramjit Nayyar and E. C. Sharma for Respondent No. 1 in C.A. Nos.
1143 44/73 S.T. Desai, section P. Nayyar and Miss A. Subhashini for the Intervener, C.I.T. Delhi.
611 The Judgment of the Court was delivered by BHAGWATI, J.
These appeals by certificate raise a common question of law relating to assessment of annual value for levy of house tax where the building is governed by the provisions of Rent Control legislation, but the standard rent has not yet been fixed.
One appeal relates to a case where the building is situate within the jurisdiction of the New Delhi Municipal Committee and is liable to be assessed to house tax under the Punjab Municipal Act, 1911 while the other two relate to cases where the building is situate within the limits of the Corporation of Delhi and is assessable to house tax under the Delhi Municipal Corporation Act, 1957.
The house tax under both statutes is levied with reference to the annual value of the building.
Section 3(1)(b) of the Punjab Municipal Act, 1911 defines "annual value" to mean, in the case of any house or building "the gross annual rent at which such house or building may reasonably be expected to let from year to year" subject to certain specified deductions, and the same definition of "annual value" is to be found in section 116 of the Delhi Municipal Corporation Act, 1957 with only this difference that there is a second proviso to section 116 which is absent in section 3(1)(b).
That proviso reads: "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 standard rent so fixed.
" It was, however, common ground between the parties that this proviso is immaterial and, in fact, it was so held in Corporation of Calcutta vs Life Insurance Corporation(1).
We may, therefore, ignore the existence of this proviso and deal with both the categories of appeals on the basis of the same definition of "annual value". "Annual value" of a building, according to this definition, would be the gross annual rent at which the building may reasonably be expected to let from year to year (emphasis supplied).
It is obvious from this definition that unlike the English Law where the value of occupation by a tenant is the criterion for fixing annual value of the building for rating purposes, here it is the value of the property to the owner which is taken as the standard for making assessment of annual value.
The criterion is the rent realisable by the landlord and not the value of the holding in the hands the tenant.
The rent which the landlord might realise if the building were let is made the basis for fixing the annual value of the 612 building.
The word "reasonably" in the definition is very important.
What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value.
Now, what is reasonable is a question of fact and it would depend on the facts and circumstances of a given situation.
Ordinarily, as pointed out by Subba Rao, J., speaking on behalf of the Court in Corporation of Calcutta vs Padma Devi(1); "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".
The actual rent payable by a tenant to the landlord would in normal circumstances afford reliable evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations such as relationship, expectation of some other benefit etc.
There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant.
But where the rent of the building is subject to rent control legislation, this approximation may and often does get displaced.
It is, therefore, necessary to consider the effect of rent control legislation on the determination of annual value This is fortunately not a virgin field.
There are at least three decisions of this Court which have spoken on this subject.
The first is the decision in Corporation of Calcutta vs Padma Devi (supra).
The question which arose in that case was whether the "annual value" of a building governed by the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 could be determined at a figure higher than the standard rent fixed under the provision of that Act.
The definition of "annual value" in section 127(a) of the Calcutta Municipal Act, 1923 under which the house tax was being levied was the same as in section 3(1)(b) of the Punjab Municipal Act, 1911 or section 116 of the Delhi Municipal Corporation Act, 1957 without the second proviso and hence in order to determine the "annual value" of the building it was necessary to find out what was the rent at which the building might reasonably be expected to let from year to year.
The Court speaking through Subba Rao, J. emphasized the use of the word "reasonably" in the definition and pointed out that since it was penal for the landlord to receive any rent in excess of 613 the standard rent fixed under the Act, the landlord could not reasonably expect to receive any higher rent in breach of the law.
It is the standard rent alone which the landlord could reasonably expect to receive from a hypothetical tenant, because to receive anything more would be contrary to law.
The learned Judge, after analysing the provisions of the Act, observed: "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 committing 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 this 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 may be noted that in this case the standard rent of the building was fixed under the Act and since it was penal for the landlord to receive any rent higher than the standard rent fixed under the Act, it was held that the landlord could not reasonably expect to receive anything more than the standard rent from a hypothetical tenant and the annual value of the building could not exceed the standard rent.
The next decision to which we must refer in this connection is the decision of this Court in Corporation of Calcutta vs Life Insurance Corporation (supra).
This case also related to a building situate in Calcutta which was governed by the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
Section 2(10) (b) of the Act defined "standard rent" to mean "where the rent has been fixed under section 9, the rent so fixed, or at which it would have been fixed if application were made under the said section".
Here, unlike Padma Devi 's case, the standard rent of the building had not been fixed under section 9 but it was common ground between the parties that Rs. 2,800 per month being the amount of the agreed rent represented the figure at which the standard rent would have been fixed if an application had been made for the purpose under section 9 and the standard rent of the building was therefore 614 Rs. 2,800 per month within the meaning of the second part of the definition of that term.
The question which arose for consideration was whether the annual value of the building was liable to be determined on the footing of this standard rent or it could be determined by taking into account the higher rent received by the tenant from its sub tenants.
The principle of the decision in Padma Devi 's case was invoked by the assessee for contending that the annual value of the building could not be determined at a figure higher than the standard rent and this contention was upheld by the Court, though there was no fixation of standard rent by the Controller under section 9 and the statutory prohibition was only against receipt of rent in excess of the standard rent fixed under the Act.
The Court pointed out that the standard rent stood defined by the latter part of section 2(10) (b) and by virtue of that provision it was statutorily determined at Rs. 2,800 per month though not fixed by the Controller under section 9 and proceeded to hold, by applying the principle of the decision in Padma Devi 's case, that the landlord could not reasonably expect to receive any rent higher than the standard rent from a hypothetical tenant and the annual value of the building could not, therefore, be fixed at a figure than the standard rent.
It will be seen that this decision marked a step forward from the decision in Padma Devi 's case because here the standard rent was not fixed by the Controller under section 9 and it was not penal for the landlord to receive any rent in excess of the statutorily determined standard rent of Rs. 2.800 per month and yet it was led by this Court that the standard rent determined the upper limit of the rent at which the landlord could reasonably expect to let the building to a hypothetical tenant.
It may be pointed out that an attempt was made on behalf of the Corporation to distinguish the decision in Padma Devi 's case by contending that that decision was based on the interpretation of section 127(a) of the Calcutta Municipal Corporation Act, 1923 while the provision which fell for interpretation in this case was section 168 of the Calcutta Municipal Corporation Act, 1951 which was different from section 127(a), in that it contained a proviso that "in respect of any land or building the standard rent of which has been fixed under section 9. the annual value thereof shall not exceed the annual amount of the standard rent so fixed" which was absent in section 127 (a).
The argument was that under the proviso the annual value was limited to the standard rent only in those cases where the standard rent was fixed under section 9 and since in the case before the Court the standard rent of the building was not fixed under section 9, the proviso has no application and the assessing authority was not bound to take into account the limi 615 tation of the standard rent.
This argument was negatived by the Court and it was held that the enactment of the proviso in section 168 of the Calcutta Municipal Corporation Act, 1951 did not alter the law and by the addition of the proviso, the meaning of the expression "gross rent at which the land or building might reasonably be expected to let" was not changed.
It was for this reason that we pointed out at the commencement of the judgment that the existence of the proviso in section 116 of the Delhi Municipal Corporation Act, 1957 is immaterial and we may proceed to deal with the appeals arising under that Act as if the definition of "annual value" did not contain that proviso.
That takes us to the third decision in Guntur Municipal Council vs Guntur Town Rate Payers ' Association(1) which extended still further the principle of the decision in Padma Devi 's case.
This was a case where the annual value was to be determined under the Madras District Municipalities Act, 1920 which applied in the city of Guntur.
Section 82 sub section (2) of the Act gave a definition of "annual value" practically in the same terms as section 3(1)(b) of the Punjab Municipal Act, 1911 and section 116 of the Delhi Municipal Corporation Act, 1957 without the second proviso.
There was also in force in the city of Guntur, the Andhra Pradesh Buildings (Lease Rent and Eviction) Control Act, 1960, which provided inter alia for fixation of fair rent of buildings.
It is necessary to refer to a material provisions of this Act.
Section 4, sub section (1) conferred power on the Controller, on application by the tenant or landlord of a building, to fix the fair rent for such building after holding such inquiry as he thought fit and sub section (2) to (5) of section 4 laid down the formulae for determination of fair rent in different classes of cases.
Sub section (1)(a) of section 7 gave teeth to the determination of fair rent by providing that where the Controller has fixed the fair rent of a building, the landlord shall not claim, receive or stipulate for the payment of anything in excess of such fair rent and sub section 2(a) of that section recognised that where the fair rent of a building has not been fixed by the Controller, the agreed rent could be lawfully paid by the tenant to the landord and it was only payment of a sum in addition to the agreed rent that was prohibited by that sub section.
Section 29 made it penal for any one to contravene the provisions of subsections 1(a) and 2(a) of section 7.
Now there could be no doubt that if the fair rent of a building were fixed under section 4, sub section (1), the decision in Padma Devi 's case would be clearly 616 applicable and the annual value would be limited to the fair rent so fixed.
But, would the same principle apply where the fair rent were not fixed ?
Would the annual value in such a case be liable to be assessed in the light of the provisions contained in the Rent Act ? That was the question which arose before the Court in the Guntur Municipal Council 's case.
The Guntur Municipal Council urged that the decision in Padma Devi 's case was not applicable and attempted to distinguish it by saying that under section 7, sub section (1) it was only after the fixation of fair rent of a building that the landlord was debarred from claiming or receiving payment of any rent in excess of such fair rent and since the fair rent of the building in that case had not been fixed, it was not penal for the landlord to receive any higher rent and the assessment of annual value was therefore, not "limited or governed by the measure provided by the provisions of the Act for determination of the fair rent.
" This attempt, however, did not find favour with the court and it was held that there was no distinction "between buildings the fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed.
" The Court pointed out: "It is perfectly clear that the landlord cannot lawfully expect to get more rent than the fair rent which is payable in accordance with the principles laid down in the Act.
The assessment of valuation must take into account the measure of fair rent as determinable under the Act.
It may be that where the Controller has not fixed the fair rent, the municipal authorities will have to arrive at their own figure of fair rent but that can be done without any difficulty by keeping in view the principles laid down in section 4 of the Act for determination of fair rent.
" It will thus be seen that even though fair rent had not been fixed under the Act as in Padma Devi 's case, nor was it statutorily determined as in the Life Insurance Corporation 's case (there being no provision in the Andhra Pradesh Rent Act similar to the latter part of section 2(10)(b) of the West Bengal Rent Act) and it was clear from the provisions of the Rent Act that it was only after the fair rent of a building was fixed by the Controller that the prohibition against receipt of any amount in excess of fair rent became applicable and so long as the fair rent was not fixed by the Controller it was open to the landlord to receive the agreed rent even though it might be higher than the fair rent, yet it was held by the court that in view of the provisions in the Rent Act in regard to fair rent, the landlord could not reasonably expect to receive from a hypothetical tenant anything more than the fair rent payable in accordance with the principles laid down in the Rent Act and the annual value was liable to be determined on the 617 basis of fair rent as determinable under the Rent Act.
The Court observed that the assessing authority would have to arrive at its own figure of fair rent by applying the principles laid down in sub sections (2) to (5) of section 4 for determination of fair rent.
This decision clearly represented a further extension of the principle in Padma Devi 's case to a situation where no standard rent has been fixed by the Controller and in the absence of fixation of standard rent, there is no prohibition against receipt of higher rent by the landlord.
It is in the light of these decisions that we must consider whether in case if a building in respect of which no standard rent has been fixed by the Controller under the Delhi Rent Control Act, 1958 the annual value must be limited to the measure of standard rent determinable under that Act or it can be determined on the basis of the higher rent actually received by the landlord from the tenant.
But before we proceed to examine this question, we must refer to a recent decision of this Court in Municipal Corporation, Indore & Ors.vs Smt.Ratnaprabha & Ors.(1) which apparently seems to strike a different note.
That was a case relating to a building situated in Indore and subject to the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
The building was self occupied and hence there was no occasion to have its standard rent fixed by the Controller.
The annual value of the building was sought to be assessed for rating purposes under the Madhya Pradesh Municipal Corporation Act, 1956 and section 138(b) of that Act provided 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 at which such building might reasonably be expected to let from year to year, subject to certain specified deductions.
The argument of the assessee was that even though no standard rent in respect of the building was fixed by the Controller, the reasonable rent contemplated by section 138(b) could not exceed the standard rent determinable under the Act and it was incumbent on 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 the Act.
This argument was sought to be supported by relying on the three decisions to which we have already made a reference.
Now it would appear that the decision in Guntur Municipal Council 's case was clearly applicable on the facts of this case and following that decision the Court ought to have held that the annual value of the building could not exceed 618 the standard rent determinable under section 7 of the Act and the assessing authority should have arrived at its own estimate of the standard rent by applying the principles laid down in that section and determine the annual value on the basis of such standard rent.
But the Court negatived the applicability of the decision in Guntur Municipal Council 's case and the earlier two cases by relying on the words "notwithstanding anything contained in any other law for the time being in force" in section 138(b).
The Court pointed out that while '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" and observed that it would be a proper interpretation of these words "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, but 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 permissible 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 "reasonable".
The Court leaned heavily on the non obstante clause in section 138(b) and distinguished the decision in Guntur Municipal Council 's case and the earlier two cases on the ground that in none of the three Municipal Acts which came up for consideration before the Court in these cases, there was any such non obstante clause.
We are not at all sure whether this decision represents the correct interpretation of section 138(b) because it is rather difficult to see how the non obstante clause in that section can possibly affect the interpretation of the words "the annual value of any building shall. . . . be deemed to be the gross annual rent at which such building. might reasonably . . be expected to be let from year to year.
" The meaning of these words cannot be different in section 138(b) than what it is in section 127(a) of the Calcutta Municipal Corporation Act, 1923 and section 82(2) of the Madras District, Municipality Act, 1920 and the only effect of the non obstante clause would be that even if there is anything contrary in any other law for the time being in force that should not detract from full effect being given to these words according to their proper meaning.
But it is not 619 necessary for the purpose of the present appeals to probe further into the question of correctness of this decision, since there is no non obstante clause either in section 3(1)(b) of the Punjab Municipal Act, 1911 or in section 116 of the Delhi Municipal Corporation Act, 1957 and this decision has therefore, no application.
Now let us turn to the present appeals and see how far the trilogy of decisions referred to earlier throws light on the solution of the problem before us.
We may first refer to the relevant provisions of the Delhi Rent Control Act, 1958 for that was the law in force at the material time relating to restrictions of rent of buildings situate within the jurisdiction of the Delhi Municipal Corporation and the New Delhi Municipal Committee.
Section 2(k) defined 'standard rent ' in relation to any premises to mean "the standard rent referred to in section 6 or where the standard rent has been increased under section 7, such increased rent.
" Sub section (1) of section 4 provided that, subject to a single narrow exception which is not material for our purpose, "no tenant shall, notwithstanding any agreement to the contrary be liable to pay to his landlord for the occupation of any premises any amount in excess of the standard rent of the premises" and sub section (2) of section 4 declared that, subject to provision of sub section (1) "any agreement for the payment of rent in excess of the standard rent shall be construed as if it were an agreement for the payment of the standard rent only".
Section 5 sub section (1) enacted a prohibition injuncting that "no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary." Then, section 6 proceeded to set out different formulae for determination of standard rent in different classes of cases and each formula gave a precise and clear cut method of computation yielding a definite figure of standard rent in respect of building falling within its coverage.
Section 9 sub section (1) provided that the Controller shall, on an application made to him in this behalf either by the landlord or by the tenant, fix in respect of any premises the standard rent referred to in section 6 and sub section (2) of section 9 laid down that in fixing the standard rent of any premises, the Controller shall fix an amount which appears to him to be reasonable having regard to the provisions of section 6 and the circumstances of the case.
Sub section (4) of section 9 provided for determination of standard rent in a case where for any reason it was not possible to determine the standard rent on the principles set forth under section 6 and said that in such a case "the Controller may fix such rent as would be reasonable having regard to the situation, locality 620 and condition of the premises and the amenities provided therein and where there are similar or nearly similar premises in the locality, having regard also to the standard rent payable in respect of such premises".
Section 9 sub section (7) enjoined the Controller, while fixing the standard rent of any premises, to specify a date from which the standard rent so fixed shall be deemed to have effect and added a proviso that in no case the date so specified shall be earlier than one year prior to the date of the application for the fixation of the standard rent.
Lastly, section 12 laid down a period of limitation within which an application for fixation of the standard rent may be made by the landlord or the tenant by providing that such application must be made within 2 years from the date of commencement of the Act in case of premises let prior to such commencement and if the premises were let after such commencement, then within 2 years from the date on which the premises were let to the tenant.
The proviso to section 12 empowered the Controller to entertain the application after the expiry of the period of limitation if he was satisfied that the applicant was prevented by sufficient cause from filing the application in time.
These provisions of the Delhi Rent Control Act, 1958 came up for consideration before this Court in M. M. Chawla vs J. section Sethi(1) where the question was whether in answer to a suit for eviction filed by the landlord, the tenant was entitled by way of defence to ask the Controller to fix the standard rent of the premises and to resist eviction by paying or depositing the standard rent so fixed even though at the date of the filing of the defence, the period of limitation for making an application for fixation of the standard rent had expired.
The argument of the tenant was that by reason of the prohibition enacted in section 4 and sub section (1) of section 5, it was not competent to the landlord to claim or receive any amount in excess of the standard rent and even though the period of limitation prescribed for making an application for fixation of standard rent had expired, the tenant was entitled to ask the Controller by way of defence to fix the standard rent, since the period of limitation was applicable only where a substantive application was made for fixation of standard rent and it had no application where the fixation of standard rent was sought by way of defence.
This Court speaking through Shah, J. negatived the contention of the tenant and construing the scheme of the Act, pointed out: ". . . . . the prohibition in sections 4 and 5 operate only after the standard rent of 621 premises is determined and not till then.
So long as the standard rent is not determined by the Controller, the tenant must pay the contractual rent: after the standard rent is determined the landlord becomes disentitled to recover an amount in excess of the standard rent from the date on which the determination operates.
We are unable to agree that standard rent of a given tenement is by virtue of section 6 of the Act a fixed quantity, and the liability for payment of a tenant is circumscribed thereby even if the standard rent is not fixed by order of the Controller.
Under the scheme of the Act standard rent of a given tenement is that amount only which the Controller determines.
Until the standard rent is fixed by the Controller the contract between the landlord and the tenant determines the liability of the tenant to pay rent.
That is clear from the terms of section 9 of the Act.
That section clearly indicates that the Controller alone has the power to fix the standard rent, and it cannot be determined out of court.
An attempt by the parties to determine by agreement the standard rent out of court is not binding.
By section 12 in an application for fixation of standard rent of premises the Controller may give retrospective operation to his adjudication for a period not exceeding one year before the date of the application.
The scheme of the Act is entirely inconsistent with standard rent being determined otherwise than by order of the Controller.
In our view, the prohibition against recovery of rent in excess of the standard rent applies only from the date on which the standard rent is determined by order of the Controller and not before that date.
" it was, thus, held that the prohibition in section 4 and sub section (1) of section 5 against recovery by the landlord of any amount in excess of the standard rent was operative only after the standard rent was fixed by the Controller under section 9 and until the standard rent was so fixed, it was lawful for the landlord to receive the contractual rent from the tenant and if the period of limitation prescribed for making an application for fixation of the standard rent had expired, the tenant could not, thereafter, get the standard rent fixed by the Controller and would continue to be liable to pay the contractual rent to the landlord.
The Revenue relied heavily on this decision and contended that since in each of the present appeals the building was let out to the tenant, but its standard rent 622 was not fixed by the Controller under section 9 and the period of limitation for making an application for fixation of the standard rent had expired, the landlord was entitled to continue to receive the contractual rent from the tenant without any legal impediment and hence the annual value of the building was not limited to the standard rent determinable in accordance with the principles laid down in the Act, but was liable to be assessed by reference to the contractual rent recoverable by the landlord from the tenant.
The argument of the Revenue was that if it was not penal for the landlord to receive the contractual rent from the tenant, even if it be higher than the standard rent determinable under the provisions of the Act, it would not be incorrect to say that he landlord could reasonably expect to let the building at the contractual rent and the contractual rent therefore provided a correct measure for determination of the annual value of the building.
This argument, plausible though it may seem at first blush, is in our opinion not well founded and must be rejected.
Ordinarily we would have examined the validity of this argument first on principle and then turned to the authorities, but we propose to reverse this order because the decisions in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case (supra) completely cover the present controversy and do not leave any scope for further argument.
Of course, the decision in Padma Devi 's case may be said to be distinguishable on the ground that in the present cases, unlike Padma Devi 's case, the standard rent of the building was not fixed by the Controller and hence it could not be said that it was unlawful or penal for the landlord to receive anything more than then the standard rent.
But so far as the decision in Life Insurance Corporation 's case is concerned, it is difficult to see how its applicability could be disputed, because there also, as in the present case, the standard rent of the building was not fixed by the Controller and in the absence of fixation of the standard rent, it was open to the landlord to receive rent in excess of the standard rent determinable under the Act.
The only distinction which could be urged on behalf of the Revenue was that under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, which came up for consideration in the Life Insurance Corporation 's case, the standard rent was statutorily determinable on the application of a mathematical formula without any discretion being left in the Controller, while under the Delhi Rent Control Act, 1958, the standard rent was not a certain and definite figure to be arrived at mathematically by application of the formulae laid down in section 6 but it was left to the Controller under section 9 sub section (2) to 623 fix the standard rent at such amount as appeared to him to be reasonable having regard to the provisions of section 6 and the circumstances of the case and hence, until the standard rent was fixed by the Controller, it could not be said what would be the standard rent of the building.
Now undoubtedly there is some difference in the provisions of the two statutes but this difference is not of such a character as to affect the applicability of the decision in the Life Insurance Corporation 's case, because in that case too, the prohibition against the landlord to receive any rent in excess of the standard rent was operative only after the fixation of the standard rent by the Controller and so long as the standard rent was not fixed, it was not unlawful or penal for the landlord to receive any rent in excess of the standard rent.
If the standard rent though not fixed and hence not legally enforceable, could provide the measure for the reasonable expectation of the landlord to receive rent from a hypothetical tenant in the Life Insurance Corporation 's case, there is no reason, why it should not equally be held to provide such measure in the present cases; as in the one case so also in the other.
The upper limit of the standard rent, though yet to be fixed by the Controller, would enter into the determination of the reasonable rent.
Moreover, it is not correct to say that under section 9 sub section (2) of the Delhi Rent Control Act, 1958 it is left to the unfettered and unguided discretion of the Controller to fix any standard rent which he considers, reasonable.
He is required to fix the standard rent in accordance with the relevant formula laid down in section 6 and he cannot ignore that formula by saying that in the circumstances of the case, he considers it reasonable to do so.
The only discretion given to him is to make adjustments in the result arrived at on the application of the relevant formula, where it is necessary to do so by reason of the fact that the landlord might have made some addition, alteration or improvement in the building or circumstances might have transpired affecting the condition or utility of the building or some such circumstances of similar character.
The compulsive force of the formulae laid down in section 6 for the determination of the standard rent is not in any way whittled down by section 9 sub section (2) but a marginal discretion is given to the Controller to mitigate the rigour of the formulae where the circumstances of the case do require.
The amount calculated in accordance with the relevant formulae set out in section 6 would, therefore, ordinarily represent the standard rent of the building, unless the landlord or the tenant, as the case may be, can persuade the Controller that there are circumstances requiring adjustment in the amount so arrived at.
It would thus be seen that there is no material distinction between the West Bengal Premises 624 Rent Control (Temporary Provisions) Act, 1950 and the Delhi Rent Control Act, 1958 so far as the provisions regarding determinations of standard rent are concerned and the decision in the Life Insurance Corporation 's case must be held to be applicable in determination of that annual value in the present cases.
But more than the decision in the Life Insurance case decision, it is the Guntur Municipal Council 's case which is nearest to the present case and is almost indistinguishable.
In that case also, so in the present cases, the standard rent of the building was not fixed by the Controller and under the Andhra Pradesh Rent Act which applied in the town of Guntur, in the absence of fixation of the fair rent, it was lawfully competent to the landlord to recover rent in excess of the fair rent determinable under that Act.
Moreover, the Andhra Pradesh Rent Act did not prescribe any clear cut formula to be applied mechanically for statutorily determining the standard rent, but it was left to the Controller to fix the standard rent having regard to (a) the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during the 12 months prior to 5th April, 1944; (b) the rental value entered in the property tax assessment book of the concerned local authority relating to the period mentioned in clause (a) and (c) the circumstances of the case, including any amount paid by the tenant by way of premium or any other like sum in addition to rent after 5th April 1944 with a provision for allowance of increase depending on the quantum of the rent so arrived at.
The discretion left to the Controller to fix the fair rent was thus much larger than that under the Delhi Rent Control Act, 1958 and yet it was held that, even though the fair rent was not fixed by the Controller, the annual value was limited by the measure of the fair rent determinable under the Act.
The view taken was that there was no material distinction between buildings fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed and even if the fair rent has not been fixed by the Controller, the upper limit of the fair rent payable in accordance with the principles laid down in the Act is bound to enter into the determination of the rent which the landlord could reasonably expect to receive from a hypothetical tenant.
The principle of this decision applies wholly and completely in the present cases and following that principle, it must be held that the annual value of a building governed by the Delhi Rent Control Act 1958 must be limited by the measure of standard rent determinable under that Act.
The landlord cannot reasonably expect to get more rent than the standard rent payable in accordance with the principles laid down in the Delhi Rent 625 Control Act, 1958.
It is true that the standard rent of the building not having been fixed by the Controller, the assessing authority would have to arrive at its own figure of standard rent by applying the principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent, but that is a task which the assessing authority would have to perform as a part of the process of assessment and in the Guntur Municipal Council 's case, this Court has said that it is not a task foreign to the function of assessment and has to be carried out by the assessing authority.
When the assessing authority arrives at its own figure of standard rent by applying the principles laid down in the Act, it does not, in any way, usurp the functions of the Controller, because it does not fix the standard rent which would be binding on the landlord and the tenant, which can be done only by the Controller under the Act, but it merely arrives at its own estimate of standard rent for the purpose of determining the annual value of the building.
That is a perfectly legitimate function within the scope of the jurisdiction of the assessing authority.
Now it is true that in the present cases the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in such of the cases, the tenant was precluded by section 12 from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance.
But from this fact situation which prevailed in each of the cases, it does not follow that the landlord could, therefore, reasonably expect to receive the same amount of rent from a hypothetical tenant.
The existing tenant may be barred from making an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent at any time within two years of the hypothetical letting and the limit of the standard rent determinable under the Act would, therefore, inevitably enter into the bargain and circumscribe the rate of rent at which the building could reasonably be expected to be let.
This position becomes absolutely clear if we take a situation where the tenant goes out and the building comes to be self occupied by the owner.
It is obvious that in case of a self occupied building, the annual value would be limited by the measure of standard rent determinable under the Act, for it can reasonably be presumed that no hypothetical tenant would ordinarily agree to pay 626 more rent than what he could be made liable to pay under the Act.
The anomalous situation which would thus arise on the contention of the Revenue would be that whilst the tenant is occupying the building the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self occupied, the annual value would be restricted to the standard rent determinable under the Act.
It is difficult to see how the annual value of the building could vary accordingly as it is tenanted or self occupied.
The circumstance that in each of the present cases the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent, cannot therefore affect the applicability of the decisions in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case and it must be held that the annual value of the building in each of these cases was limited by the measure of the standard rent determinable under the Act.
The problem can also be looked at from a slightly different angle.
When the Rent Control Legislation provides for fixation of standard rent, which alone and nothing more than which the tenant shall be liable to pay to the landlord, it does so because it considers the measure of the standard rent prescribed by it to be reasonable.
It lays down the norm of reasonableness in regard to the rent payable by the tenant to the landlord.
Any rent which exceeds this norm of reasonableness is regarded by the legislature as unreasonable or excessive.
When the legislature has laid down this standard of reasonableness, would it be right for the Court to say that the landlord may reasonably expect to receive rent exceeding the measure provided by this standard? Would it be reasonable on the part of the landlord to expect to receive any rent in excess of the standard or norm of reasonableness laid down by the legislature and would such expectation be countenanced by the Court as reasonable? The legislature obviously regards recovery of rent in excess of the standard rent as exploitative of the tenant and would it be proper for the Court to say that it would be reasonable on the part of the landlord to expect to recover such exploitative rent from the tenant ?
We are, therefore, of the view that, even if the standard rent has not been fixed by the Controller, the landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent determinable under the Act and this would be so equally whether the building has been let out to a tenant who has lost his right to apply for fixation of the standard rent or the building is self occupied by the owner.
The assessing authority would, in either case, have to arrive at its own figure of the standard rent by 627 applying principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent.
It is, therefore, clear that in each of the present cases, the annual value of the building must be held to be limited by the measure of the standard rent determinable on the principles laid down in the Delhi Rent Control Act, 1958 and it cannot exceed such measure of standard rent.
We accordingly allow Appeals Nos. 1143 and 1144 of 1973 and declare in such of these two cases that the assessment of the Annual value of the building in excess of the standard rent determinable on the principles laid down in the Delhi Rent Control Act, 1958 was illegal and ultra vires.
So far as Appeal No. 1201(N) of 1973 preferred by the Municipal Corporation of Delhi is concerned, it relates to assessment of annual value of self occupied building and since we have held that in case of self occupied building also the annual value must be determined on the basis of the standard rent determinable under the provisions of the Delhi Rent Control Act, 1958 and there we have agreed with the judgment of the High Court, that appeal must be dismissed.
The assessee in each case will get his costs throughout.
N.K.A. C.A. Nos.1143 & 1144/73 allowed.
C.A. 1201 (N)/73 dismissed.

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Section 3(1)(b) of the Punjab Municipal Act, 1911 defines "annual value" to mean, in the case of any house or building "the gross annual rent at which such house or building. may reasonably be expected to let from year to year" subject to certain specified deductions.
The same definition of "annual value" is to be found in section 116 of the Delhi Municipal Corporation Act, 1957 but with only difference that there is a, second proviso to section 116 which is absent in section 3(1)(b).
One appeal related to a case where the building is situated within the jurisdiction of the New Delhi Municipal Committee and is liable to be assessed to house tax under the Punjab Municipal Act, 1911 while the other two related to cases where the building is situated within the limits of the Corporation of Delhi and is assessable to house tax under the Delhi Municipal Corporation Act, 1957.
The house tax under both statutes was levied with reference to the "annual value" of the building.
The common question of law arising in the appeals related to the assessment of annual value for levy of house tax where the building is governed by the provisions of Rent Control Legislation but where the standard rent has not yet been fixed.
The argument of the Revenue was (i) that if it was not penal for the landlord to receive the contractual rent from the tenant, even if it be higher than the standard rent determinable under the provisions of the Act, it would not be incorrect to say that the landlord could reasonably expect to let the building at the contractual rent and the contractual rent therefore provided n correct measure for determination of the annual value of the building, and (ii) the period of limitation for making an application for fixation of tho standard rent had expired long prior to the commencement of the assessment years and in each of the cases, the tenant was precluded by section 12 of the Rent Control Act from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance.
Allowing the appeals, ^ HELD: 1.
Tho Court would have examined the validity of this argument first on principle and then turned to the authorities, hut it proposed to reverse this order because the decisions in the Life Insurance Corporation 's 608 case and the Guntur Municipal Council 's case (supra) completely covered the.
present controversy and did not leave any scope for further argument.
The decision in Padma Devi 's case may be said to be distinguishable on the ground that in the present cases, unlike Padma Devi 's case, the standard rent of the building was not fixed by the Controller and hence it could not be said that it was unlawful or penal for the landlord to receive anything more than the standard rent.
But so far as the decision in Life Insurance Corporations case is concerned, it is difficult to sec how its applicability could be disputed, because there also, as in the present case, the standard rent of the building was not fixed by the Controller and in the absence of the standard rent, it was open to the landlord to receive rent in excess of the standard rent determinable under the Act.
The only distinction was that under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, which came up for consideration in the Life Insurance Corporation s case, the standard rent was statutorily determinable on the application of a mathematical formula without any discretion being left in the Controller, while under the Delhi Rent Control Act, 1958 the standard rent was not a certain and definite figure to be arrived at mathematically by application of the formula laid down in section 6 but it was left to the Controller under section 9 sub section (2) to fix the standard rent at such amount as appeared to him to be reasonable having regard to the provisions of section 6 and the circumstances of the case.
Hence, until the standard rent was fixed by the Controller, it could not be said what would be the standard rent of the building.
[622D H, 623A] 2.
Undoubtedly there is some difference in the provisions of the two statutes but this difference is not of such a character as to affect the applicapability of the decision in the Life Insurance Corporation 's case.
In that case too, the prohibition against the landlord to receive any rent in excess of the standard rent was operative only after the fixation of the standard rent by the Controller and so long as the standard rent was not fixed, it was not unlawful or penal for the landlord to receive any rent in excess of the standard rent.
If the standard rent though not fixed and hence not legally enforceable, could provide the measure for the reasonable expectation of the landlord to receive rent from a hypothetical tenant in the Life Insurance Corporation 's case, there is no reason why it should not equally be held to provide such measure in the present cases.
As in the one case so also in the other? the upper limit of the standard rent. though yet to be fixed by the Controller, would enter into the determination of the reasonable rent.
[623A D] 3.
It is not correct to say that under section 9 sub section (2) of the Delhi Rent Control Act, 1958, it is left to the unfettered and unguided discretion of the Controller to fix any standard rent which he considers reasonable.
He is required to fix the standard rent in accordance with the relevant formula laid down in section 6 and he cannot ignore that formula by saying that in the circumstances of the case, he considers it reasonable to do so.
The only discretion given to him is to make adjustments in the result arrived at on the application of the relevant formula, where it is necessary to do so by reason of the fact that the landlord might have made some addition, alteration or improvement in the building or circumstances might have transpired affecting the condition or utility of the building or some such circumstances of similar character.
The compulsive force of the formula laid down in section 6 for the determination of the standard rent 609 is not in any way whittled down by section 9 sub section (2) but a marginal discretion is given to the Controller to mitigate the rigour of the formula where the circumstances of the case so require.
The amount calculated in accordance with the relevant formula set out in section 6 would, therefore, ordinarily represent the standard rent of the building, unless the landlord of the tenant.
, as the case may be, can persuade the Controller that there are circumstances requiring adjustment in the amount so arrived at.
There is therefore no material distinction between the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 and the Delhi Rent Control Act, 1050 so far as the provisions regarding determination of standard rent are concerned and the decision in the Life insurance Corporations case must be held to be applicable in determination of the annual value in the present cases.
[623D H, 624A] 4.
In the Guntur Municipal Council 's case also, as in the present cases.
the standard rent of the building was not fixed by the Controller and under the Andhra Pradesh Rent Act which applied to the town of Guntur, in the Absence of fixation of the fair rent, it was lawfully competent to the landlord to recover rent hl excess of the fair rent.
determinable under that Act.
[624B C] 5.
The annual value of the building governed by the Delhi Rent Control Act, 1958 must be limited by the measure of standard rent determinable under that Act.
The landlord cannot reasonably expect to get more rent than the standard rent payable in accordance with the principles laid down in the Delhi Rent Control Act, 1958.
It is true that the standard rent of the building not having been fixed by the Controller, the assessing authority would have to arrive at its own figure of standard rent by applying the, principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent, but that is a task which the assessing authority would have to perform as a part OF the process of assessment and in the Guntur Municipal Council 's case, this Court has said that it is not a. task foreign to the function of assessment and has to be carried out by the assessing authority.
When the assessing authority arrives at its own figures of standard rent by applying the principles laid down in the Act, it does not, in any way, usurp the function of the Controller, because it does not fix the standard rent which would he binding on the landlord and the tenant, which can be done only by the Con F troller under the Act but it merely arrives at its own estimate of standard rent for the purpose of determining the annual value of the building.
That is a perfectly legitimate function within the scope of the jurisdiction of the assessing authority.
[624G H. 625A C] 6.
The existing tenant may be barred from making an application for fixation of the standard rent and may, therefore, be liable to pay contractual rent to the landlord but the hypothetical tenant to whom the building is hypothetically to be let, would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent at any time within two years of the hypothetical letting and the limit of the standard rent determinable under the Act.
would therefore, inevitably enter into the bargain and circumscribe the rate of rent at which the building could reasonably be expected to he let.
[625E G] 7.
It is difficult to sec how the annual value of the building could vary accordingly as it is tenanted or self occupied.
The circumstance that in each.
610 of the present cases, the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent.
cannot therefore, affect the applicability of the decision in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case, and it must.
be held that the annual value of the building in each of these cases was limited by the measure of the standard rent determinable under the Act.
[626B C] 8.
Even if the standard rent has not been fixed by the Controller, the landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent determinable under the Act and this would be so equally whether the building has been let out to a tenant who has lost his light to apply for fixation of ' the standard rent or the building is self occupied by the owner.
The assessing authority would.
in either case, have to arrive at its own figure of the standard rent by applying principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent.
[626G H, 627A] 9.
It is clear therefore that in each of the present cases the annual value of the building must be held to be limited by the measure of the standard rent determinable on the principles laid down in the Delhi Rent Control Act, 1958 and it cannot exceed such measure of standard rent.
[627A B] Corporation of Calcutta vs Life Insurance Corporation ; ; Corporation of Calcutta vs Padma Devi ; ; Guntur Municipal Council vs Guntur Town Rate payers ' Association ; M. M. Chawla vs J. section Sethi referred to.
Municipal Corporation, Indore & Ors.
v, Smt.
Ratnaprabha & Ors. ; distinguished.


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Civil Appeal No. 1531 of 1980.
Appeal by special leave from the judgment and order dated the 9th August, 1978 of the Allahabad High Court in C.M. Writ No.6788 of 1978 J.K Goel for the Appellant S.Markendeya for Respondent.
The order of the Court was delivered by DESAI J. Appellant Ramakant Misra joined service in the Kanpur Electric Supply Administration ( 'Administration ' for short) which was then a Department of the Government of Uttar Pradesh.
On the constitution of U.P. Electricity Board ( 'Board ' for short), under the provisions of ( 'Act ' for short), with effect from April 1,1958, the Kanpur Electric Supply Administration stood transferred to the Board and the employees working in the Administration were deemed to be on deputation to 650 the Board though they would continue to be Government servants as provided in a Circular dated March 13, 1959.
As per Notification No. 3721E/74 23P (3) 155E/174 dated August 3, 1974 the posts held formerly in the Administration by the employees working in the Administration were abolished and the deputationists were absorbed in the service of the Board.
However, before the appellant could be so absorbed he was served with a charge sheet on November 19, 1971, alleging that he was guilty of disorderly behaviour punishable under the relevant Standing orders.
Simultaneously the appellant was suspended from service pending a departmental inquiry.
The inquiry officer who was appointed to hold the inquiry after holding the inquiry recorded his finding that the charge was proved.
It would be advantageous to reproduce the charge.
It is extracted from the report of the inquiry officer: "Shri Rama Kant was charged for misconduct under clause 20 (9) .
18 and 28 of the Standing Orders for disorderly behaviour or conduct likely to cause a breach of peace threatening an employee within the premises and conduct prejudiced to good order and discipline".
The specific allegation is that on November 18, 1971, around 2.50 p.m. appellant was complaining about the deduction that was being made from his wages for his absence from the place of work and late attendance with Shri Mahendra Singh.
When Shri Mahendra Singh replied that he had no separate rules for him, the appellant is alleged to have lost his balance.
The threatening language alleged to have been used by the appellant when freely translated reads: "Are other persons your father.
I will make you forget your high handedness either here or somewhere else.
An officer of yesterday 's making discloses power consciousness".
The inquiry officer held that the words attributed to the appellant were used by him in reference to Shri Mahendra Singh and that use of such language would constitute misconduct within the relevant clauses of the Standing Orders hereinbefore mentioned.
The inquiry officer recommended dismissal from service.
As the matter was being dealt with on the footing that the appellant was a Government servant entitled to the protection of Article 311 of the Constitution, 651 a second show cause notice according to the provisions then contained in article 311 was required to be served before penalty was finally imposed upon him.
But even before the notice was served the appellant was dismissed from service on April 6, 1972.
A dispute having been raised questioning the validity of termination of service of the appellant, the 1st respondent made a reference to the Labour Court, U.P. for adjudication of the dispute.
The Labour Court by its Award dated March 21, 1978, held that the termination of service of the appellant was legal and proper.
A petition under Article 227 of the Constitution to the High Court failed.
Hence this appeal by special leave.
Mr. Markandeya, learned counsel who appeared for the respondent urged that any person who claims to be a Government employee cannot seek relief both under Article 311 on the footing that he is holding a civil post or is a member of the civil service of the State on the one hand and a workman falling under the purview of the , on the other, and that this aspect is being examined by a larger Bench.
In this case it is not necessary to resolve the controversy because we requested Mr. Markandeya to state specifically whether according to him the appellant on the date of his dismissal was a Government servant governed by article 311 or a workman within the meaning of the .
Mr. Markandeya specifically stated and it was also held by the Labour Court though wrongly but which aspect at present is not relevant that the appellant is not a Government Servant holding a civil post or a member of the civil service of the State but that he is a workman entitled to the protection of the .
We are proceeding on that assumption in this case.
The charge of which appellant is found guilty is already extracted hereinbefore.
It amounts to a riotous or disorderly behaviour during working hours at the establishment.
At least this could not be said to be an act subversive of discipline.
The misconduct attributed to the appellant is that he used some language unbecoming of a disciplined workman and may have thereby exposed a threatening posture which is alleged to be subversive of discipline.
Shorn of all embellishments, enraged by deduction from his wages appellant, a Joint Secretary of Union of Workmen used some 652 language which can be said to be indiscreet.
In order not to minimise the gravity of the charge we have extracted the charge by its free translation and it must be confessed that both the learned counsel who appeared on either side were fully conversant with the Hindi language and, therefore, clearly understood the import of the language used by the appellant.
In the ultimate analysis the mis conduct is use of language indiscreet or may be said to be indecent or may be disclosing a threatening posture.
We will proceed on the assumption that use of such language is punishable under the relevant Standing Orders.
So what.
The punishment must be for misconduct.
To some extent misconduct is a civil crime which is visited with civil and pecuniary consequences.
In this case it has resulted in dismissal from service.
In order to avoid the charge of vindictiveness, justice, equity and fairplay demand that punishment must always be commensurate with the gravity of the offence charged.
In the development of industrial relation norms we have moved far from the days when quantum of punishment was considered a managerial function with the courts having no power to substitute their own decision in place of that of the management.
More often the courts found that while the misconduct is proved the punishment was disproportionately heavy.
As the situation then stood, courts remained powerless and had to be passive sufferers incapable to curing the injustice.
Parliament stepped in and enacted section IIA of the which reads as under: "11A. Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National or Tribunal for adjudication and, in the course of the adjudication proceeding, the Labour Court Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require".
It is now crystal clear that the Labour Court has the jurisdiction and power to substitute its measure of punishment in 653 place of the managerial wisdom once it is satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case.
And this Court is at present exercising jurisdiction under article 136 over the decision of the Labour Court.
Therefore this Court can examine whether the Labour Court has properly approached the matter for exercising or refusing to exercise its power under section 11A. Before we can exercise the discretion conferred by section 11A, the Court has to be satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case.
These words indicate that even though misconduct is proved and a penalty has to be imposed, the extreme penalty of dismissal or discharge was not justified in the facts and circumstances of the case meaning thereby that the punishment was either disproportionately heavy or excessive.
As stated earlier, it is a well recognised principle of jurisprudence which permits penalty to be imposed for misconduct that the penalty must be commensurate with the gravity of the offence charged.
What has happened here.
The appellant was employed since 1957.
The alleged misconduct consisting of use of indiscreet or abusive or threatening language occurred on November 18, 1971, meaning thereby that he had put in 14 years of service.
Appellant was Secretary of the workmen 's Union.
The respondent management has not shown that there was any blameworthy conduct of the appellant during the period of 14 years ' service he rendered prior to the date of misconduct and the misconduct consists of language indiscreet, improper or disclosing a threatening posture.
When it is said that language discloses a threatening posture it is the subjective conclusion of the person who hears the language because voice modulation of each person in the society differs and indiscreet improper, abusive language may show lack of culture but merely the use of such language on one occasion unconnected with any subsequent positive action and not preceded by any blameworthy conduct cannot permit an extreme penalty of dismissal from service.
Therefore, we are satisfied that the order of dismissal was not justified in the facts and circumstances of the case and the Court must interfere.
Unfortunately, the Labour Court has completely misdirected itself by looking at the dates contrary to record and has landed itself in an unsustainable order.
Therefore, we are required to interfere.
What ought to be the proper punishment in this case ? In our 654 opinion, in such a situation withholding of two increments with future effect will be more than adequate punishment for such a low paid employee.
Accordingly, this appeal is allowed and the Award of the Labour Court is set aside as also the penalty imposed by the management is quashed and set aside.
The appellant is reinstated with all the benefits, including the back wages, but his two increments falling due from the date of his termination of service be withheld with future effect.
P.B.R. Appeal allowed.

Output:
In order to avoid the charge of vindictiveness, justice, equity and fairplay demand that punishment must always be commensurate with the gravity of the offence charged.
In the development of industrial relation norms law has moved far from the days when quantum of punishment was considered a managerial function with the courts having no power to substitute their own decision in place of that of the management.
More often, the courts found that, while the misconduct was proved, the punishment was disproportionately heavy.
As the situation then stood, courts remained powerless and had to be passive sufferers incapable of curing the injustice.
Parliament stepped in and enacted section IIA of the Industrial Disputes Act by which the Labour Court is clothed with jurisdiction and power to substitute its measure of punishment in place of the managerial wisdom once it is satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case.
This Court, while exercising jurisdiction under Article 136 can examine whether the Labour Court has properly approached the matter in exercising or refusing to exercise its power under section 11A.
The words that the court must be "satisfied that the order of discharge or dismissal was not justified" occurring in section 11A indicate that even though misconduct is proved and a penalty has to be imposed, the extreme penalty of dismissal or discharge was not justified in the facts and circumstances of the case meaning thereby that the punishment was either disproportionately heavy or excessive.
In the instant case the charge against the appellant workman was that he had used threatening and abusive language against a senior officer unbecoming of a disciplined workman and had adopted a threatening posture, subversive of discipline.
An inquiry was conducted.
On the recommendations of the Inquiry officer the workman was dismissed from service.
The Labour Court upheld the order of dismissal and the High Court dismissed the appellant 's petition under Article 227.
649 On the question whether the order of dismissal was justified on the facts and in the circumstances of the case.
^ HELD: The order of dismissal was not justified.
[653 A] It is a well recognized principle of jurisprudence, which permits penalty to be imposed for misconduct, that the penalty must be commensurate with the gravity of the offence charged.
[653 C D] The appellant workman had put in more than 14 years of service and had been the Secretary of the workers ' union.
The management had not shown that there was any blameworthy conduct on his part during the period of his service.
The misconduct alleged against him consisted of use of language which was indiscreet and improper, disclosing a threatening posture.
[653 E F] When it is said that his language disclosed a threatening posture it was the subjective conclusion of the person who heard the language because voice modulation of each person in the society differs.
Indiscreet, improper, abusive language may show lack of culture.
But mere use of such language on one occasion unconnected with any subsequent positive action and not preceded by any blameworthy conduct cannot permit an extreme penalty of dismissal from service.
[653 F H]