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PETITIONER: MORVI MUNICIPALITY

       Vs.

RESPONDENT: STATE OF GUJARAT AND ORS.WITHJUNAGADH NAGARPALIKAV.STATE OF

DATE OF JUDGMENT31/03/1993

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. VERMA, JAGDISH SARAN (J) KASLIWAL, N.M. (J)

CITATION:  1993 AIR 1508            1993 SCR  (2) 803  1993 SCC  (2) 520        JT 1993 (2)   529  1993 SCALE  (2)380

ACT: Municipalities: Gujarat Municipalities Act 1963. Sections 2(1), 2(17), 53, 99, 99(1), 99(1)(i), 99(1)(e), 105 to    112/Rules   2(7),    4,    5--Municipalities--Property tax--Annual letting value of building or land or both--To be determined  on the basis of annual standard/fair rent  under Rent                       control                       Act Assessment--Procedure--Limitation-Municipality  to  complete the authentication of the assessment list before 31st  July- Whether directory in nature. Gujarat Municipalities Rules: Rules 4 and 5-Validity of.

HEADNOTE: Some  tax-payers of the appellant-Municipality filed a  writ petition  in the High Court challenging the validity of  the rules  made by it for the levy of consolidated property  tax on lands and buildings and also the assessment list prepared and authenticated by the Municipality for the year  1967-68, 1968-69 and 1969-70.  It was contented before the High Court that  Rules 2(7), 4 and 5 of the Rules of  the  consolidated property  tax  on the lands and buildings were  ultra  vires section  99(1)  (i)  and the proviso (e)  to  it  read  with section  2(1) of the Act, and that the assessment lists  for the  years 1967-68, 1968-69 and 1969-70 were  invalid  since they were prepared without following the procedure laid down in Sections 105 to 112 of the Act. The  High Court upheld the validity of Rules 2(7) and 4  and struck  down the validity of Rule 5. It also  declared  that the tax collected by the 803 804 Municipality for the assessment years 1968-69 and 1969-70 in excess of the amounts which may be determined in  accordance with  the principles laid down was without the authority  of law and struck down the assessment list for the year 1967-68 on  the ground that it was not prepared in  compliance  with the procedure I aid down in Sections 105 to 112 of the Act. Being aggrieved by the High Court’s decision the  appellants preferred the present appeals. Allowing the appeals, this Court,

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HELD:  1. It is not the value of occupation of the  property to  the tenant, but the rental income from it to  the  owner which is to be taken into consideration while estimating the reasonable  return  that  a landlord  can  expect  from  his property.   While estimating or calculating the annual  rent which  might reasonably be expected from such property,  the provisions  of  such  legislation  have  to  be  taken  into consideration.  Different rent restriction legislations have described   the   maximum  rent   recoverable   under   them differently such as standard rent, fair rent etc.  Hence the annual  letting  value of the building or land  or  both  to which the rent restriction legislation is applicable  cannot exceed  the annual standard or fair rent.  It is the  annual standard/fair  rent  which alone, therefore,  can  form  the basis  of  the assessment of the property tax by  the  local authority. [809 E-G] 1.2.  Since there is no non-obstante clause in  the  Gujarat Municipalities  Act,  1963, this Court refrains  from  going into  the question of non-obstante clause in the  provisions of the Act levying property tax. [810-C] 13.  If the expression ’annual letting value’ in rule  4  is read as the annual letting value as determined by the  outer limit prescribed by the standard or fair rent under the rent restriction legislation applicable to the premises, which in the  present  cast is the Bombay Rents,  Hotel  and  Lodging House Rates Control Act, 1947, the validity of the said rule cannot be assailed. [811-B] 1.4.  Rule 5 mandates the actual rent received to  be  taken into consideration for fixation of the annual letting value, even if it is in excess of the standard rent fixed under the rent  restriction  legislation,  which is  contrary  to  the interpretation  placed  by  this  Court  on  the  expression ’annual  letting value".  The correct mode of  getting  over the difficulty is to 805 amend Rule 5 itself suitably to take care of such properties Instead  of keeping it on the rule book as it is.  There  is nothing  to prevent the Municipality from introducing a  new rule in place of the said rule. [812B-E] 1.5.  Even without Rule 5 and on the basis of Rule 4  as  it is, the annual letting value can be calculated on the  basis of the standard rent where the rent restriction  legislation is applicable.  Where it is not applicable, nothing prevents the Municipality from assessing the properties on the  basis of the actual rent received under the same Rule 4 itself. [811-F] 1.6.  Rule 5 is to be read as being applicable only  to  the properties  which are not governed by the provisions of  the Rent  Control  Act.   As far as  the  properties  which  are amenable  to  the  provisions of the Rent  Control  Act  are concerned,  their  annual letting value will  be  calculated only  on  the  basis  of the  standard  rent  determined  or determinable  under tile said Act.  Where the standard  rent is  determined by the Civil Court, of course under the  rent restriction  legislation, the annual letting value  will  be determined  on the basis of such standard rent.   The  rule, however,  goes further and says that in other  cases,  viz., (1)  where the standard rent is not determined and (2)  even if it is determined, where actual rent charged is in  excess of  the standard rent, it is the actual rent, which will  be taken as the basis for calculating the annual letting value. The  latter two situations do not make  distinction  between the properties to which the rent restriction legislation  is

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applicable and the properties to which it is not applicable. In  other  words,  under  the  rule,  even  where  the  rent restriction  legislation is in force, it is the actual  rent which will be taken as the basis for calculating the  annual letting value if the standard rent is not determined by  the Court. [817-D, 818 E-F] 1.7.  Rule  5, to the extent it enables the  authorities  to take the actual rent as the basis for calculating the annual letting  value,  will apply to the properties to  which  the rent  restriction legislation. which in the present case  is the  Bombay  Rent, Hotel and Lodging Housing  Rates  Control Act, 1947, does not apply. [819-B] The Corporation of Calcutta v. Smt.  Padma Debi and  Others, [1962]  3 SCR 49; Corporation of Calcutta v. Life  Insurance Corporation  of  India, [1971] 1 SCR 248,  Guntur  Municipal Council v. Guntur Town Rate Payers 806 Association [1971] 2 SCR 423 and Dewan Daulat Rai Kapoor and Others v. New Delhi Municipal Committee & Others, [1980] 1 SCC 685, relied on. Municipal  Corporation  Indore  v.  Smt.   Ratnaprabha   and Others, [1976] 4 SCC 622, referred to. [809-D] 2.  Section 112 in the context in which it appears  is  both directory and enabling in nature insofar as it requires  the Municipality  to authenticate the list before 31st  July  of the  official  year.  That the provisions are no  more  than directory  is clear from the fact that they provide that  if the Municipality fails to do its duty, the State  Government way  complete  the work by appointing person(s)  to  do  it. This is as it should be since the ,various provisions of the Act  show  that  the  revenue and  the  expenditure  of  the Municipality,  among others, is controlled and regulated  by the  State Government Further the Section requires that  the Municipality  should  complete  the  authentication  of  the assessment  list  before  a particular date  which,  in  the present  case happens to be, 31st July of the year.  It  was necessary  to incorporate in the section the said  provision to  give enough time to the State Government to step in  and authenticate  the list before the end of the official  year. The  official year is the same for the Municipality as  well as  the State Government and for the purposes of  budgeting, the   provision   that  the  assessment   list   should   be authenticated  by  the particular date was necessary  to  be incorporated.   In  any  case neither  the  Municipality  is prevented from authenticating it beyond 31st July nor is the person   or  persons  appointed  by  the  State   Government prevented  from doing so beyond 31st March of  the  official year. [816 E-G]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1374 of 1974 From  the  Judgment  and Order  dated  13/14-2-1974  of  the Gujarat  High Court in Special Civil Application No. 220  of 1970. WITH Civil Appeal No. 1776 of 1980 From the Judgment  and Order dated 21.4.1980/2.5.1980 of the Gujarat  High Court in Special Civil Application No. 942  of 1976. B.K. Mehta and H.S. Parihar for the Appellant. 807 Dave,   Ms.   Meenakshi  Arora,  Anip   Sachthey   for   the

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Respondents. The Judgment of the Court was delivered by SAWANT, J. Civil Appeal No. 1374/1974 Some  tax-payers  of the appellant Morvi  Municipality  [the ’Municipality’] had filed a writ petition in the High  Court challenging  the  validity of the rules made by it  for  the levy of consolidated property tax on lands and buildings and also the assessment lists prepared and authenticated by  the Municipality  for  the years 1967-68, 1968-69  and  1969-70. There is no dispute that the concerned rules have been  made by the Municipality under Section 271 (1) read with  Section 99 (1) of the Gujarat Municipalities Act, 1963 [the  ’Act’]. The relevant contentions of the writ petitioners who are the respondents before us, before the High Court were as follows               1.  Rules 2 (7), 4 and 5 of the Rules  of  the               consolidated  property  tax on the  lands  and               buildings were ultra vires Section 99 (1)  (i)               and proviso (e) to it read with Section 2  (1)               of the Act.               2. The assessment lists for the years 1967-68,               1968-69  and 1969-70 were invalid  since  they               were prepared without following the  procedure               laid down in Sections 105 to 112 of the Act. The High Court upheld the validity of Rules 2 (7) and 4.  No appeal  is preferred against that part of the  High  Court’s decision.  We are, therefore, concerned in this appeal  only with  the validity of Rule 5 which has been struck  down  by the  High Court.  The High Court has also declared that  the tax  collected by the Municipality for the assessment  years 1968-69  and 1969-70 in excess of the amounts which  may  be determined in accordance with the principles laid down by it in  the judgment under appeal, was without the authority  of law.  So far as the assessment lists for the said two  years are concerned, we are concerned in this appeal only with the validity  of  the  excess amount.  However, as  far  as  the assessment  list for the year 1967-68 is concerned,  it  has been  struck down in its entirety by the High Court also  on the  ground that it was not prepared in compliance with  the procedure  laid  down  in Sections 105 to 112  of  the  Act. Hence, we have to 808 consider the validity of the entire assessment for the  said year. Rules  4 and 5 have obviously been made by the  Municipality to  give  effect to Section 99 (1) (i)  which  provides  for imposition of taxes on buildings or lands situate within its limits.  That section reads as follows:               "99.  Taxes which may be imposed.  (1) Subject               to  any  general or special orders  which  the               State  Government may make in this behalf  and               to  the provisions of sections 101 and 102,  a               municipality  may impose for the  purposes  of               this Act any of the following taxes, namely :-               (i) a tax on building or lands situate  within               the  municipal  borough  to be  based  on  the               annual letting value or the capital value or a               percentage  of capital value of the  buildings               or lands or both;" Further, Clause (e) of the second proviso to sub-section (1) of Section 99 reads as follows:               "(e)  the  municipality in  lieu  of  imposing               separately  any  two  or  more  of  the  taxes               described in clauses (i), (vii), (ix) and  (x)               except  a  special  water-rate  may  impose  a               consolidated   tax  assessed  as  a   tax   on

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             buildings or lands or both situated within the               municipal borough." Since  the Municipality has chosen to impose the tax on  the basis  of  the "annual letting value" of the  buildings  and lands  and  not  on  the  basis  of  the  capital  value  or percentage  of capital value, we have to ascertain in    the present  case  the  precise connotation  of  the  expression "annual  letting value".  Section 2 (1) of the  Act  defines the expression "annual letting value" as follows:               "(1)  ’annual letting value’ means the  annual               rent   for   which  any  building   or   land,               exclusive- of furniture of machinery contained               or situate therein or thereon might reasonably               be  expected  to let from year  to  year,  and               shall  include all payments made or agreed  to               be  made  by  a tenant to  the  owner  of  the               building  or  land on account  of  occupation,               taxes  under  any law for the  time  being  in               force,  insurance or other charges  incidental               to his tenancy"  809 The  crucial expressions in the above definition are  "might reasonably  be  expected to let’ and ’all payments  made  or agreed  to  be made by a tenant to the owner on  account  of occupation."  Shri  Mehta,  the  learned  counsel  for   the Municipality  contended  that the  said  expressions  unmis- takably  indicate the actual rent received by  the  landlord from  his  tenant.  According to him,  the  reasonable  rent means  the  rent  which a willing tenant  will  pay  to  the willing  owner and the agreement between the  parties  would indicate  the  same  and no more and no  less.   He  further argued  that  the standard rent under the  rent  restriction legislation  was  only one of the factors relevant  for  the estimation  of the reasonable expectation of the  rent  from the  property  and was not the sole basis of such  rent  and hence the assessment can be made on the basis of the  actual rent received. 2.  It  is  not  necessary for us  to  go  into  a  detailed discussion  of the ’pros and cons of the question since  the question  is no longer res Integra.  The decisions  of  this court rendered in The Corporation of Calcutta v. Smt.  Padma Debi and others, [1962] 3 SCR 49, Corporation of Calcutta v. Life  Insurance  Corporation  of India, [1971]  1  SCR  248, Guntur   Municipal  Council  v.  Guntur  Town  Rate   Payers Association [1971] 2 SCR 423 and Dewan Daulat Rai Kapoor and Others v. New Delhi Municipal Committee and Others, [1980] 1 SCC  685 have consistently held that it is not the value  of occupation  of  the property to the tenant, but  the  rental income  from  it  to the owner which is  to  be  taken  into consideration while estimating the reasonable return that  a landlord  can  expect from his property.  It has  also  been held  there that wherever the rent is restricted on  account of  the operation of the rent restriction  legislation,  the outer limit of the reasonable rent that can be expected from the  property  stands defined by such  restriction.   Hence, while estimating or calculating the annual rent which  might reasonably be expected from such property, the provisions of such  legislation  have  to  be  taken  into  consideration. Different  rent restriction legislations have described  the maximum  rent  recoverable under them  differently  such  as standard  rent,  fair rent etc.  Hence  the  annual  letting value  of  the building or land or both to  which  the  rent restriction  legislation  is applicable  cannot  exceed  the annual   standard   or  fair  rent.   It   is   the   annual standard/fair  rent  which alone, therefore,  can  form  the

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basis  of  the assessment of the property tax by  the  local authority.   It is true that although a four-judge Bench  of this  Court  as early as in Padma Debi’s case  [Supra],  had taken  this  view  which has been reiterated  in  the  other decisions cited above, a three-Judge Bench of this Court  in a decision in Municipal 810 Corporation Indore v. Smt.  Ratnaprabha and Others, [1976] 4 SCC 622 has held that the actual annual rent received by the owner of the property notwithstanding the application of the rent  restriction  legislation  can  provide  a  basis   for assessment of the property tax.  However, this view taken in the  above  case  has been explained  in  Dewan  Daulat  Rai Kapoor’s case [Supra], which is the latest decision of  this Court on the point.  It has been pointed out there that  the said  view in the case of the Municipal Corporation,  Indore [supra]  turned on the presence of the non  obstante  clause ’notwithstanding anything contained in any other law" in the provisions of the Act levying the property tax there.  Since in the present Act, namely, the Gujarat Municipalities  Act, 1963,  there is no such non obstante clause, the view  taken there  would  not apply to the present  case.   Shri  Mehta, learned counsel appearing for the Municipality did not press his further contentions that the presence or the absence  of such  non obstante clause would not make any  difference  to the  proposition  laid down there that  the  annual  letting value  should  always be based upon the actual  annual  rent received and not on the standard or fair rent under the rent restriction legislation.  We, therefore, refrain from  going into  the  said question in the present case and  leave  the point open for consideration, if necessary, in future cases. For our purpose, it is sufficient to proceed on the  footing that the annual letting value has to be determined, as  held in  the aforesaid three decisions of this Court, keeping  in mind   the  outer  limit  down  in  the   rent   restriction legislation.               Rule 4 of the Municipality is as under:               "4. The tax on open lands and buildings  shall               be  levied  in accordance with  the  following               rate.               1.   The   buildings  which   are   used   for               residential  purpose  shall be levied  on  the               annual  letting  value by  the  percentage  as               follows:-               x x x x x x               2.  The  buildings  which arc  used  for  non-               residential  purpose  shall be levied  on  the               annual  letting  value by  the  percentage  as               follows:-               x x x x x x 811 It  merely  prescribes that the tax that may  be  levied  on buildings  used  both for  residential  and  non-residential purposes will be on the basis of the annual letting value by the percentages prescribed therein, Hence if the  expression "annual  letting  value’  in the said rule is  read  as  the annual  letting  value  as  determined  by  the  out   limit prescribed  by  the  standard or fair rent  under  the  rent restriction legislation applicable to the premises, which in the  present  case is the Bombay Rents,  Hotel  and  Lodging House Rates Control Act, 1947, the validity of the said rule cannot be assailed.  The High Court has, therefore,  rightly upheld it. 3.  However,  Rule  5  with the validity  of  which  we  are concerned here, reads as follows:

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             "5 (a).  The rental actually realised in  each               case  of the buildings, shops and lands  which               are let, shall be considered to be the  annual               letting  value, but if the assessment  officer               has reasons to believe that the rent shown  in               the   rent  note  or  in  account,  does   not               represent the correct letting value, then  the               case  of  such properties he  [officer]  shall               assess  the  reasonable annual  letting  value               according to his own decision.               (b) In the case of buildings which are sublet,               the  rent paid by the occupier shall be  taken               as annual letting value.               (c)  In the case of the buildings used by  the               owner himself, the annual letting value, shall               be  fixed  with  the  rent  derived  from  the               properties [buildings] which are let nearby.               The  assessment  officer will not  assess  the               annual  letting value more than 6-1/4% of  the               capital  value in the case of  the  properties               noted in sub-rule C." It will be apparent that the rule seeks to lay down the mode of  working  out the annual letting value of  the  property. According to the rule, it is to be worked out by taking  the actual  rental  realised as the basis.  However,  where  the assessment officer has reason to believe that the rent shown in  the rent note or in the accounts does not represent  the correct  letting  value,  the rule permits  the  officer  to assess the reasonable annual 812 letting value according to his own decision.  In clause  (c) the  rule  states that so far as the buildings used  by  the owner himself are concerned, the annual letting value should be  fixed  with  reference  to the  rent  derived  from  the properties which are let nearby. It is clear that to the extent the rule mandates the  actual rent received to be taken into consideration for fixation of the  annual  letting value, even if it is in excess  of  the standard rent fixed under the rent restriction  legislation, it is contrary to the interpretation placed by this Court on the  expression  "annual  letting value".  It  is  for  this reason that the High Court has struck down the whole of  the said  rule.   Shri Mehta does not dispute the  premise  that where the rent restriction legislation is applicable, Rule 5 will  have to be read down to mean that the  annual  letting value  is  to  be  fixed only on the  basis  of  the  annual standard  rent.   However,  he  contends  that  it  is   not necessary  to  strike down the said rule for  there  may  be properties  which are not governed by the  rent  restriction legislation and their annual letting value can be determined unrestricted  by  the  provisions of  the  rent  restriction legislation.  His grievance is that since the High Court has struck down the rule, instead of reading it down to bring it in conformity with the judicial decisions, the  Municipality is  hampered in assessing the properties to which  the  rent restriction  legislation does not apply.  Shri Mehta may  be right there, if there are such properties within the  limits of  the Municipality.  The correct mode of getting over  the difficulty  is to amend Rule 5 itself suitably to take  care of such properties instead of keeping it on the rule book as it  is.  There is nothing to prevent the  Municipality  from introducing a new rule in place of the said rule. Even without Rule 5 and on the basis of Rule 4 as it is, the annual  letting value can be calculated on the basis of  the standard  rent  where the rent  restriction  legislation  is

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applicable.   Where it is not applicable,  nothing  prevents the Municipality from assessing the properties on the  basis of the actual rent received, under the same Rule 4 itself. However,  pending the framing of the new rule, Rule 5 as  it can  be  interpreted  as  being  applicable  only  to   such properties  which are not governed by the  rent  restriction legislation.  Hence the decision of the High Court will have to be modified to the extent the High Court has struck  down the  said rule instead of allowing it to remain on the  rule book confining its operations only to those properties which are not governed by 813 the, Rent Control Act. 4.  Coming now to the assessment list for 1967-68  which  is struck down in its entirety by the High Court, we are afraid that  the  High Court has misinterpreted the  provisions  of Sections  105  to  112  of  the  Act  which  relate  to  the assessment of taxes on properties.  Section 105 provides for preparation of an assessment list containing the particulars mentioned therein such as the address and description of the property,  the name(s) of the owner, the valuation based  on the  annual  letting value, of the amount  of  tax  assessed thereon etc.  Section 106 indicates the person(s)  primarily liable  for  tax and the procedure to be followed  when  the name  of  such person cannot be  ascertained.   Section  107 provides  for the publication of notice when the  assessment has been completed and the right of the owner or occupier of the  property  included  in the list or any  agent  of  such person, to inspect the list, and to make extracts therefrom. Section  108  then provides for a public notice  of  a  date before  which the objections to the valuation or  assessment in the assessment list, shall be made and of the hearing  of objections.  Sub-section (3) of Section 108 provides for the hearing  of  objections by the Executive  Committee  of  the Municipality constituted under Section 53 of the Act.   Upon hearing  of  the  objections  and  disposing  them  of,  the Executive Committee is required to cause the result  thereof to be noted in the book kept for the purpose.  The Executive Committee is also empowered to amend the assessment list, if necessary,  in  accordance with the result of  the  hearing. However,  before  any amendment is made  in  the  assessment list, the reasons thereof are required to be recorded in the book  concerned.   This sub-section also provides  that  the powers  and duties of the Executive Committee under it,  may be  transferred  to  any other committee  appointed  by  the Municipality  or  with  the permission  of  the  Development Commission  to any officer or pensioner of  the  Government. Sub-section  (4)  of the said section provides that  as  and when  in respect of any property the objections  made  under the section have been disposed of and the amendment required by  sub-section (3) have been made in the  assessment  list, the  said  list, so tar as such  properties  are  concerned. shall be authenticated by the signature of the Chairman  and at  least one other member of the Executive  Committee.   If the  Executive Committee’s powers and functions  under  sub- section (3) have been transferred to any other committee  or to   an  officer  or  pensioner  of  the   Government,   the authentication is to be made by the signatures of 814 not less than 2 members of such Committee or of the  officer or pensioner as the case may be.  The person or the  persons so  authenticating  the list have to certify that  no  valid objection  has been made to the valuation and assessment  of the  property contained in the list except in the  cases  in which amendments have been made therein.  Sub-section (5) of

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the   said   Section  then  provides  that  the   lists   so authenticated shall be deposited in the Municipal Office and shall  be open for inspection to an owners and occupiers  of the  property entered in the list or to their agents.   Sub- section  (6)  states that subject to such  alterations  made therein  under  the  provisions of Section 109  and  to  the result  of  any appeal or revision under that  Section,  the entries   in  the  assessment  list  so  authenticated   and deposited  shall be accepted as conclusive evidence (i)  for the purposes of the Municipal taxes and of the valuation  of the  annual letting value and [ii] for the purposes  of  the tax for which such assessment list has been prepared and the amount  of  the  tax  leviable on  such  properties  in  any official year in which the fist is in force. Section 109 gives power to the Executive Committee to  amend the assessment list if any entry in respect of any  property has  been  either omitted from or erroneously  made  therein through fraud, accident or mistake.  It also gives power  to the  Executive Committee to amend the list if  any  building has  been  constructed, altered or reconstructed  either  in whole or part, after the preparation of the assessment list. Section 110 provides that where any building or any  portion of  such  building  which is liable to  payment  of  tax  is demolished  or  removed otherwise than by an  order  of  the Executive  Committee,  the person primarily liable  for  the said  tax  has to give notice to the Chief  Officer  of  the Municipality. Section 111 states that it shall not be necessary to prepare a  new assessment list every year subject to  the  condition that  the assessment list shall be completely revised  every four  years.  The Chief Officer is given power to adopt  the valuation and assessment contained in the list for any  year such  alteration  as may be deemed necessary  for  the  year immediately following.  However, the provisions of  Sections 107, 108 and 109 are applicable to the said list as if a new assessment  list has been completed at the  commencement  of the official year. The  ’official year’ has been defined in Section 2  (17)  of the  Act  to mean the year commencing on the  first  day  of April.  815 Section  112,  then gives power to the State  Government  to appoint a person to authenticate the assessment list in case of  default  by the Municipality in authenticating  it.   It states  that  where in any year, a new  assessment  list  is prepared  or a list is revised or the valuation and  assess- ment  contained  in  the  list  for  the  year   immediately preceding is adopted with or without alterations, such  new, revised or adopted assessment list shall be authenticated in the  manner  provided by Section 108 at any time  not  later than  31st  of July of the official year to which  the  list relates.   If  the list is not so  authenticated,  then  the State Government shall appoint such person or persons as  it thinks fit, to prepare, revise or adopt and authenticate the assessment  list.  Such person or persons have to  authenti- cate  such  list  at any time before the  last  day  of  the official  year,  i.e., 31st March of the year to  which  the list relates.  The section also states that Sections 105  to 108 and Section 111 shall, so far as may be necessary, apply to the preparation, revision or adoption of the list as  the case may be by the person or persons appointed by the  State Government. 5.  Section  99, among others, of the Act to which  we  have already made a reference earlier, empowers the  Municipality to  impose  various taxes, fees and cesses as  a  source  of

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revenue  for discharging its duties and functions.  The  tax on  buildings or lands or both, is only one of  such  taxes. This tax can be recovered separately or as the  consolidated tax  along  with  general water rate  and  lighting  tax  as provided in Clause (e) of the second proviso to  sub-section (1) of Section 99.  The provisions contained in Sections 105 to 112 above only relate to the preparation of an assessment list  of properties which are liable to such tax.  They  are procedural in nature and the charging section for the tax is Section  99 of the Act.  Section 99 itself does not  provide for  any  limitation of time on the imposition of  tax.  The High Court has, however, read limitation of time in  Section 112 on the authentication of the assessment list.  According to  the  High  Court,  the  period  of  limitation  for  the Municipality  to authenticate the list is upto 31st July  of the official year to which the list relates, and in  default by the Municipality. the period of limitation for the person appointed by the State Government is upto the 31st March  of the  said official year.  What is further. according to  the High   Court,  the  Municipality  cannot  authenticate   the assessment list beyond 31st July of the official year and it is  the person (s) appointed by the State  Government  alone who can do so and that too upto 31st March of that  official year.  It is difficult to accept this reasoning.   According to us, the High Court has erred in reading in the provisions of H 816 Section  112 an intention by the legislature to lay  down  a period of limitation either for the Municipality or for  the person or persons appointed by the State Government.  It  is obvious that Section 112 in the context in which it  appears is  both  directory  and enabling in nature  insofar  as  it requires  the Municipality to authenticate the  list  before 31st July of the official year.  That the provisions are  no more than directory is clear from the fact that they provide that  if  the Municipality fails to do its duty,  the  State Government  may complete the work by appointing a  person(s) to  do  it.   This  is as it should  be  since  the  various provisions  of  the  Act  show  that  the  revenue  and  the expenditure of the Municipality, among others, is controlled and regulated by the State Government.  Further the  Section requires   that   the  Municipality  should   complete   the authentication  of the assessment list before  a  particular date  which, in the present case happens to particular  date which,  in the present case happens to be, 31st July of  the year.   It was necessary to incorporate in the  section  the said  provision to give enough time to the State  Government to  step in and authenticate the list before the end of  the official  year.   The  official year is  the  same  for  the Municipality  as  well as the State Government and  for  the purposes  of  budgeting, the provision that  the  assessment list  should  be authenticated by the particular  dates  was necessary  to  be incorporated.  However, even  Section  112 which is procedural in nature, does not state that the  list which  is authenticated by the Municipality after 31st  July of  the  official year and by the person  appointed  by  the Government after 31st March of the same official year  would be invalid.  On the contrary, when the Municipality fails to authenticate  the  assessment  list till 31st  July  of  the official year, the section empowers the State Government  to appoint  a person or persons to authenticate the  same.   It was  also  necessary to prescribe some time  limit  for  the authentication  by  the person so appointed  and  hence  the section   provides   that  person(s)  so   appointed   shall authenticate it by 31st March of the official year.  In  any

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case,   neither   the   Municipality   is   prevented   from authenticating  it  beyond 31st July nor  is  the  person(s) appointed by State Government prevented from doing so beyond 31st March of the official year.  In the present case, there was an additional factor which was relevant to be taken into consideration.  The Municipality had levied the property tax for  the  first time in the official year  1967-68  and  the State  Government  felt  that it should  be  given  time  to authenticate the same before 31st March, 1968.  That is  the reason why the State Government did not appoint a person  to authenticate the list after 31st July 1967, even though  the Mun- 817 cipality had failed to do so.  Instead, the State Government had  extended the time for the Municipality to do  so,  till 31st  March, 1968.  The step taken by the government was  in conformity  with  the interpretation of  the  provisions  of Section 112 which, as stated earlier, are only directory and enabling in nature.  The High Court has, therefore, erred in holding  that  the Municipality could not  authenticate  the assessment  list after July, 1967 and it is only  the  State Government  which could do it.  This the High Court did,  as stated earlier, by reading 31st July, 1967 as the period  of limitation for the Municipality to authenticate the list for the  official  year 1967-68. There is no  dispute  that  the Municipality  authenticated  the list by 28th  March,  1968. The  finding of the High court that the assessment list  for the year 1967-68 is void and illegal is, therefore,  clearly wrong. 6.In the result, we set aside the finding of the High  Court that  Rule 5 is ultra vires the Act and hold that ’the  same is  to  be read as being applicable only to  the  properties which are not governed by the provisions of the Rent Control Act.   As  far as the properties which are amenable  to  the provisions  of  the Rent Control Act  are  concerned,  their annual letting value will be calculated only on the basis of the standard rent determined or determinable under the  said Act.  We, further, set aside the decision of the High  Court striking down the assessment list for 1967-68 and hold  that the  said assessment list is validly authenticated  and  the taxes can be recovered on the basis of the same.  The appeal is allowed accordingly with no order as to costs. CIVIL APPEAL NO. 1776/1980 7.  In  the present case, Rule 5 of the rules  made  by  the appellant  Junagadh Municipality [’the  Municipality]  under Section  271 (1) and Section 99 (1) (i) of the Act has  been struck down by the High Court to the extent it provides  for calculating the annual letting value on the basis of  actual rent,  as  being ultra vires Section 99 (1)  (i)  read  with Section  2(1) of the Act.  The relevant portion of the  said Rule 5 reads as follows:               "In the case of buildings or lands. which  are               let. the rent which is the actual rent, or  in               the case where the standard rent is determined               by  the  Civil Court, the same shall  in  such               case  be considered to be the  annual  letting               value,  unless the executive committee or  the               special committee on the Chief Officer or  his               delegate entrusted with the 818               work of valuation has reasons to believe  that               the  rent  shown in the rent note  or  account               does  not represent the correct letting  value               or  is collusive or is not determined  by  the               Court  on merits as the case may be  in  which

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             case  reasons for such belief shall be  stated               in  the  decision provided that in  case  rent               actually  charged is in excess of the rent  as               determined  by the Court at any time the  rent               actually charged shall be considered to be the               annual letting value.’ 8.  It is not necessary to repeat what we have discussed  on the subject in the accompanying appeal, viz., C.A. No.  1374 of  1974.  Suffice it to say that in the present  case,  the rule  itself  has provided that where the standard  rent  is determined  by  the Civil Court, of course  under  the  rent restriction  legislation, the annual letting value  will  be determined  on the basis of such standard rent.   The  rule, however,  goes further and says that in other  cases,  viz., [1]  where the standard rent is not determined and 121  even if it is determined, where actual rent charged is in  excess of  the standard rent, it is the actual rent, which will  be taken as the basis for calculating the annual letting value. The  latter two situations do not make  distinction  between the properties to which the rent restriction legislation  is applicable and the properties to which it is not applicable. In  other  words,  under  the  rule,  even  where  the  rent restriction  legislation is in force, it is the actual  rent which will be taken as the basis for calculating the  annual letting value if the standard rent is not determined by  the Court.   The High Court has, therefore, rightly struck  down the  rule  to the extent that it applies  to  properties  to which  the rent restriction legislation is  applicable.   In view  of what we have stated in the accompanying appeal,  we see no reason to take a different view. However, Shri Mehta appearing for the Municipality is  right in  contending that it is not necessary to declare the  rule ultra  vires  Section 99(1) read with Section 2  because  it also  provides  for assessing the annual  letting  value  of property on the basis of the actual rent.  That part of  the rule  which enables the authorities to take the actual  rent as the basis for calculating the annual letting value can be read  down  to apply only to those properties to  which  the rent restriction legislation does not apply.  We agree  with him there, if there are such properties within the limits of the 819 Municipality. 9. We, therefore, allow the appeal set aside the decision of the  High  Court striking down the part of  the  rule  which enables  the authorities to adopt actual rent as  the  basis for calculating the annual letting value of the  properties. Instead,  we declare that Rule 5, to the extent  it  enables the  authorities  to take the actual rent as the  basis  for calculating the annual letting value, will apply only to the properties  to which the rent restriction legislation  which in  the present case is the Bombay Rents, Hotel and  Lodging House Rates Control Act, 1947, does not apply. The appeal is allowed accordingly with no order as to costs. V.M.                       Appeal allowed. 820