Pidathala Ranga Reddy (died) per L.Rs. vs Kurnool Municipality

Motilal B. Naik, J.—This Second Appeal is directed against the judgment and decree in A.S. No.. 79 of 1985 dated 9-12-1987 on the file of the I Additional District Judge, Kurnool.

The first appellant (since died) was the plaintiff in the suit who filed the same against the respondent-Municipality seeking a declaration that the proposed enhancement of house tax from Rs. 891-52 ps. per half year to Rs.3209-50 ps. per half year for the building D.No. 40/317-D Kurnool is illegal and void and for a permanent injunction restraining the defendant from collecting the enhanced tax.

According to the plaintiff, the building is used for non-residential purpose as a hotel. It was assessed to tax half yearly for Rs. 891-50 ps on an annual rental value of Rs. 5,600/-. While so, the defendant-Municipality issued a special notice dated 22-3-1982 proposing to enhance the tax to Rs. 3566.10 ps. per half year. As against the said notice, the plaintiff preferred a revision petition before the Municipal Authority. The defendant-Municipality reduced the tax from Rs. 3566.10ps.toRs.3209/-perhalfyear. It is the case of the plaintiff that there was no addition or improvement to the building for the last several years. The defendant-Municipality in the notice compared the suit building to that of another building which is let out to Karur Vysya Bank which was fetching a monthly rent of Rs. 1400/-. It is stated by the plaintiff that the building let out to Karur Vysya Bank is a pucca building with RCC roof whereas the suit building is not a pucca building and therefore, there is no justification in enhancing the house property tax to Rs. 3209/-. Even otherwise, it was contended by the plaintiff that the procedure contemplated in terms of Section 87 of the Andhra Pradesh Municipalities Act as well as the fixation of fair rent as per the provisions of Section 4 of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960 was not followed and therefore, any enhancement without following the proper procedure Is illegal and cannot be sustained.

On behalf of the defendant-Municipality, a detailed written statement was filed contending that the building which is leased out to Karur Vysya Bank was fetching a rent of Rs. 1400/- per month, which is smaller than the suit building, and a comparative analysis was made and basing on enquiry, the enhancement was made from Rs. 891.50 to Rs. 3209/- and therefore, there was no illegality in such fixation.

On the basis of the averments, the trial Court framed appropriate issues and after trial, decreed the suit while quashing the special notice dt. 22-3-1982 issued by the defendant-Municipality seeking to enhance the property tax holding that the tax arrived at is not based on any procedure.

Aggrieved by the judgment and decree of the trial Court in O.S. No. 856 of 1982 dated 31-7-1985, the defendant-Municipality carried the matter by way of an appeal in A.S. No. 79 of 1985 before the I Additional District Judge, Kurnool. The learned I Additional District Judge has considered the entire aspect and reversed the judgment and decree of the trial court by allowing the appeal. In the judgment the lower appellate Court held that since the provisions contemplated u/s 4 of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960 (hereinafter referred to as "the Act") have been struck down from the Statute by the Andhra Pradesh High Court and in view of such striking down, the procedure of fixation of fair rent is not available to the defendant-Municipality and as such whatever reasonable method available to the defendant-Municipality has been followed and fair rent was fixed and therefore, there is no illegality in it.

Against the said judgment and decree, the present Second Appeal has been preferred.

I have heard the counsel for the appellants and the respondent-Municipality. What looks to me is that though the trial Court has considered the entire aspect and declared that the enhancement of house tax is not based on determination of fair rent, the lower appellant Court held that in the absence of provisions contemplated u/s 4 of "the Act" as the same was struck down by the High Court of Andhra Pradesh, there is no illegality in fixing property tax on certain enquiries by the respondent-Municipality and accordingly reversed the judgment and decree of the trial Court.

It is not in dispute that Section 87 of the A.P. Municipalities Act contemplates certain procedure for fixing the fair rent. Though this Court on earlier occasion had struck down the provisions of Section 4 of "the Act", in a subsequent decision in Suresh Gir v. K. Sahadev, 1994 (1)AWR 178 has revived Section 4 of "the Act". In view of the revival of Section 4 of "the Act", the procedure contemplated under the said Section 4 of "the Act" is available to the respondent-Municipality for fixation of fair rent. Even according to Section 87 of the A.P. Municipalities Act, certain procedure is contemplated for fixation of fair rent. In the instant case, nothing is placed before me to show that the procedure contemplated u/s 87 of the A.P. Municipalities Act has been followed and fair rent has been fixed on that basis and property tax is revised on it.

In view of the revival of Section 4 of "the Act" the procedure contemplated under the provisions of the said "Act" have to be necessarily followed and fair rent has to be arrived at by the respondent-Municipality after giving notice to the affected parties. Thereafter, it is open to the respondent-Municipality to assess the property tax.

In this view of the matter, in the absence of fixation of fair rent basing on which property tax has to be assessed, the issuance of special notice dated 22-3-1982 by the respondent-Municipality seeking to enhance the property tax to Rs. 3209/- per half year cannot be sustained.

Accordingly, the judgment and decree of the lower Appellate Court in A.S. No. 79 of 1985 are set aside. Consequently, the judgment and decree of the trial court in O.S. No. 856 of 1982 are confirmed.

In the result, the Second Appeal is allowed. No costs.