G.C. Mathur, J. - (1.) THE Petitioners are the owners of house No. 54/20, Canal Road, Kanpur and are themselves living in it. The house has been in existence in the present form since, at least, the year 1943. For the quinquennial assessment for the period 1943 -48 under the UP Municipalities Act, the annual value of the house was fixed at Rs. 2,400/ -; for the quinquennial assessment for 1948 -53 the annual value was fixed at Rs. 3,096/ -; for the quinquennial assessment for 1953 -58 the annual value remained at the same figure and for the quinquennial assessment for 1958 -63 the annual value was fixed at Rs. 4,200/ -. When the Nagar Mahapalika, Kanpur, came into existence, it also assessed the house for 1963 -68 at the annual value of Rs. 4,200/ -. For the quinquennial assessment for 1968 -73 the Nagar Mahapalika proposed the enhancement of the annual value to Rs. 9,600/ - and a notice of the proposals was served on the Petitioners. The Petitioners filed objections against the proposals. The objections were partly allowed and the annual value was fixed at Rs. 5,400/ -. The Petitioner then filed an appeal before the Judge of Small Causes, Kanpur. The appeal was partly allowed and the annual value was fixed at Rs. 4,800/ -. The Petitioners thereupon filed an appeal before the Addl. District Judge, Kanpur. The Addl. District Judge has dismissed the appeal and confirmed the annual value, fixed by the Judge of Small Causes. It is against these orders that the Petitioners have filed this writ petition.
(2.) "Annual value" is defined in Section 174 of the UP Nagar Mahapalika Adhiniyam, 1959, as follows: 'Annual value' means - - (a) In the case of railway stations, colleges, schools, hostels, factories and other such buildings, a proportion not below 5 per cent to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building, less depreciation at a rate to be fixed by rule, to the estimated value of the land appurtenant thereto, and (b) in the case of a building or land not falling within the provisions of Clause (a) the gross annual rent for which such building, exclusive of furniture or machinery therein, or such land is actually let, or where the building or land is not let or in the opinion of the assessing authority is let for a sum less than its fair letting value, might reasonably be expected to be let from year to year: Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the Mahapalika, be excessive if calculated in the aforesaid manner, the Mahapalika may fix the annual value at any less amount which appears to it equitable: Provided further that where the Mahapalika so resolves, the annual value in the case of owner occupied buildings and land shall, for the purposes of assessment of property taxes, be deemed to be 25 per cent less than the annual value otherwise determined under this section. The house in question is covered by Clause (b). The building has never been let out and has always been in occupation of the owners. The annual value of the building could, therefore, be determined at an amount for which it "might reasonably be expected to be let from year to year." The contention of learned Counsel for the Petitioners is that the house is subject to the UP (Temp.) Control of Rent and Eviction Act, 1947 and if the house was let out, the Petitioners, could not recover a rent more than the reasonable rent of the house. According to them, the reasonable rent would be equivalent to the municipal assessment for the year 1942 plus 25 per cent thereof. According to this calculation, the house is already over assessed. In K.B. Agarwal v. Kirpa Narain, 1959 AWR 672, it was held with respect of the similar provisions of the UP Municipalities Act: The correct interpretation of the provisions of Section 140(1)(b) of the UP Municipalities Act read with the provisions of UP (Temp.) Rent Control and Eviction Act would be to lay down that annual value for the purposes of Section 140(1)(b) shall be the annual rent at which the building could be let under the provisions of the UP (Temp.) Control of Rent and Eviction Act. A somewhat similar question arose before the Supreme Court in the Corporation of Calcutta v. Sm. Padma Debi : AIR 1962 SC 151. The Supreme Court 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 is said that Section 127(a) (of the Calcutta Municipalities Act) does not contemplate the actual rent received by a landlord but a hypothetical rent which he can reasonably be expected to receive if the building is let. So stated the proposition is unexceptionable. Hypothetical rent may be described as a rent which a landlord may reasonably be expected to get in the open market. But an 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 circumstances the scope of the bargain in the market. In no circumstances, the hypothetical rent can exceed that limit. In an unreported decision in Niranjan Lal Bhargava Trust v. Nagar Mahapalika, Allahabad C.R. No. 687 of 1968 Dt -29 -1 -1970 - -since reported in, 1970 AWR 113), Trivedi, J. has observed: The assessing authority cannot ignore the statute which controls the rent of the buildings. Sri N.D. Pant, learned Counsel for the Nagar Mahapalika, has urged that the provisions of the UP (Temporary) Control of Rent and Eviction Act cannot be taken into consideration in determining the annual rent of a building. I am unable to accept this contention. In the present case, as already stated above, the building can be assessed only at an amount for which it "might reasonably be expected to be let from year to year". In determining the amount at which a building might reasonably be expected to be let, one has to take into consideration the provisions of any law which controls rents. Neither the Judge of Small Causes nor the Additional District Judge has determined the rent at which the building might reasonably be expected to be let. They have both fixed the amount of the annual value arbitrarily irrespective of the provisions of Section 174 of the Adhiniyam. The Additional District Judge has observed that it was common knowledge that there had been further rise in prices during the last five years and probably, therefore, the letting value of the premises has also increased. What he was required to determine was the amount at which the premises might reasonably be expected to be let out. It may also be mentioned here that the Petitioners had raised both before the Small Cause Court Judge and the Additional District Judge the question that the annual reasonable rent can be assessed only on the basis of the rent recoverable under the UP (Temporary) Control of Rent and Eviction Act but neither of them has considered this question. The writ petition is accordingly allowed, the order of the Addl. Distt. Judge dated 18 -9 -1968, dismissing the Petitioner's appeal is quashed and he is directed to restore the appeal to its original number and to dispose it of in accordance with law. He will keep in mind the observations made above and determine the annual value on the sum for which the building might reasonably be expected to be let in view of the provisions of the UP (Temporary) Control of Rent and Eviction Act. The Petitioners will be entitled to their costs from the first Respondent.;