Avnash Chander and Another vs Mulk Raj Anand and Another

Rajendra Nath Mittal, J.—This revision petition has been filed by the tenants against the judgment of the Appellate Authority, Gurdaspur, dated 31st July, 1976.

The Petitioners are tenants under the Respondents in the building in dispute known as Airlines Hotel situated in the main bazar, Pathankot at a monthly rent of Rs. 1600/- from January, 1969. They filed an application for fixing the fair rent u/s 4 of the East Punjab Urban Rent Restriction Act, 1949, alleging that in 1938-39 a similar building could not fetch more than Rs. 20/- per mensem as rent and as such its basic rent should not be more than Rs. 20/- per month. Consequently, it was prayed that the fair rent of the building be fixed.

The Respondents contested the application who controverted the allegations of the Petitioners and inter alia pleaded that the building could fetch more rent than Rs. 2500/- per mensem in the year 1938-39 and, therefore, its fair rent could not be less than Rs. 3000/- per month. They further pleaded that the tenanted property did not consist of only building but also furniture, refrigerator, utensils and various other items.

The learned Rent Controller held that there was no evidence to fix the basic rent of the property and consequently the agreed rent would be its fair rent. He, therefore, dismissed the application. The Petitioners went up in appeal before the Appellate Authority who affirmed the judgment of the Rent Controller and dismissed the same. They have come up in revision to this Court

It is contended by Mr. H.L. Sibal, Sr. Advocate, Learned Counsel for the Petitioners that the Appellate Authority and the Rent Controller erroneously held that the basic rent of the building could not be fixed and, therefore, the agreed rent would be its fair rent. He submits that a similar building has been let out for running a hotel known as Standard Hotel in its vicinity, the fair rent of which was fixed as Rs. 66/- per mensem and that can be taken as a basis for fixing the fair rent of the building in dispute.

I have heard the Learned Counsel at a considerable length but regret my inability to accept the contention of Mr. Sibal. Section 4 inter alia provides that for determining the fair rent first the basic rent of the building shall be fixed taking into consideration the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during 1938 and the rental value of such building if entered in the property Tax Assessment Register of Municipal Committee relating to the above said period. Admittedly the building was not in existence in 1938 and was constructed during the years 1965 to 1968 and, therefore, in order to determine the basic rent we have to see whether there was similar accommodation in similar circumstances available during 1938. The building in dispute consists of more than 22 rooms with attached bath rooms fitted with sanitary fittings including the flush latrines and all modern amenities, one dinning hall, kitchen, pantry, office room, store, etc. It has a over head tank. The building is of modern construction. The Executive Engineer, Construction Division, P.W. D. (B & R) was appointed as Local Commissioner to assess the estimated value of the building. He gave his report dated 15th January, 1975 according to which the present construction value of the bilding is Rs. 3,45,000/- and odd and the present value after depreciation is Rs. 3,18,000/- Besides the building, two air-conditioners, one refrigerator, one electric motor for tube-well, 13 sofa sets, 20 dunlop chairs, one counter with formica top and dunlop seat, two exhaust fans, one record changer, one coffee plant for expresso, twenty two tables, one pedestal fan, 17 blankets, 32 pillows, 36 wooden beds with mattresses, 22 ceiling fans, curtains, various other pieces of furniture, crockery, utensils and several other articles of furnishing. The value of the above items might be running into several thousand rupees.

Reference has been made by the counsel for the Petitioners to the building of Standard Hotel which is stated to be in the same Bazar in which the Air-lines Hotel is situated. It is alleged that the building of the Standard Hotel contains about 20 rooms and its fair rent had been fixed at Rs. 66/- vide Exhibit P-6. Parshotam Lal, A.W. 1, is the owner of the building of the Standard Hotel. He stated that his building was 60/70 years old. There was no flush system in the hotel and no bath rooms were attached with the rooms. He admitted that the building of the Air-lines Hotel was a new one and was constructed about 4/5 years back. The Executive Engineer, Construction Division, was also directed to prepare a report regarding the building of the Standard Hotel. In his report he worked out the present constructed value of the building as Rs. 93,000/- and odd and after depreciation Rs. 31,000/-. It is evident from the statement of Parshotam Lal and the report of the Executive Engineer that the building of Standard Hotel is very old and it is not fitted with modern amenities There is also evidence that various electric fittings bad been fitted in the building of Air-lines Hotel, whereas there are no such finings in the Standard Hotel building. The Standard Hotel building, it appears, was not constructed for the purpose of Hotel, whereas, the building in dispute was specifically constructed for that purpose and that is why all the rooms of the said building are attached with sanitary fitted bath rooms The only similarity between the two buildings appears to be that they are being used as hotels and are situated in the same bazar, otherwise there are no similarities in other respects. In addition to that no furnishing as was given by the Respondents to the Petitioners was given in the case of Standard Hotel by the landlord to the tenant. Even if the rent of all the furnishing is worked out that will itself come to a huge amount. In the circumstances, it cannot be held that the building of Standard Hotel constitutes similar accommodation to that of the building in dispute and its fair rent cannot be taken into consideration for fixing the fair rent of the building. The Petitioners also produced the evidence regarding the rents of certain other buildings in the vicinity However, none of the buildings provides similar accommodation, therefore, the said instances are of no use. Moreover those buildings are being used as shops.

The Respondent in rebuttal examined witnesses regarding rents of the various buildings in the vicinity. Ramesh Chander, R.W.-1, stated that the Punjab National Bank had taken on lease a building measuring about 5500 square feet for its Branch at Pathankot. The monthly rent of the building was Rs. 1,500/-. It comprises of one big hall, two stores, one latrine and one strong room. Om Parkash, R.W. 3 deposed that Bank of India was paying rent at the rate of Rs. 810/- per mensem regarding the building taken on lease at Pathankot by it. The covered area with the Bank was 875 square feet. Kewal Krishan, R. W-6, stated that Jammu and Kashmir Bank, Pathankot, had taken a building comprising one hall, two rooms, one bath room and one flush latrine on monthly rent of Rs 850/-. The building was taken on rent on 1st June, 1976. The rents of the said buildings also cannot constitute a criteria for determining the fair rent of the building However, it is clear that the newly constructed buildings with sanitary fittings have been leased out on higher rents. It is also well known that an owner has to spend huge amount on sanitary fittings. Therefore, while determining the fair rent of the buildingt the fact that these are fitted with sanitary fittings cannot be lost sight of.

The question as to what constitutes "similar circumstances" has been interpreted by the Full Bench of this Court in Chanan Singh v. Sewa Ram (1966) 68 P.L. R 335, wherein Dua J. in a separate judgment, with whom H.R. Khanna, J and Falshaw, C.J. concurred, observed as follows:

After independence, India has made rapid progress in the industrial fields, with the result that shortage of accommodation in commercial and industrial places, which are usually urban areas, has increased several fold. This prosperity has also raised cost of construction. In order, therefore, to construe the expression ''similar circumstances'' with an eye to promote the object and purpose of the Act and to remedy the mischief created by shortage of accommodation in urban areas, the Court has consistently with the purpose of affording the required protection to the tenants, to see that capitalists, or, those with money, are not unduly discouraged from further construction of buildings. This aspect was noticed by a Bench of this Court in Balkishan v. Subash Chand Keeping in view this consideration, which is of no small importance in this revolutionary change of circumstances, I am wholly disinclined to hold that the Legislature could have intended by using the expression ''similar circumstances'' not to have visualised the improvements of civic amenities in a given locality...There being no fixed, rigid or certain, meaning uniformly assignable to the expression ''similar circumstances'', it would seem to me to be open to this Court to come to a realistic solution of the problem, which, in my opinion, is not prohibited by any canon of construction. To accede to the Respondent''s extreme contention would seem to me to lead to somewhat startling consequences which may well clothe the statutory instrument before us with an unreasonably harsh and oppressive character, which, in the absence of clearest expression, I would be slow to impute to the Legislature.

In view of the foregoing discussion, while generally agreeing with my learned Chief Justice, I should not extend the expression ''similar circumstances'' to a situation where the locality in question has undergone drastic change in the matter of civic amenities like drainage, sanitation, supply of electricity, educational institutions, hospitals and post office etc.

Similar view was expressed by the Supreme Court in Miran Devi v. Birbal Das 1977 (2) R.C.J. 593, wherein it was observed that the phrase "in similar circumstances" occurring in Section 4(2)(a) qualifies and governs both the expressions, namely, "the same" and "similar accommodation". For arriving at the figure of basic rent the prevailing rate of rent in the locality for the same building has got to be determined. But such prevailing rate payable for the same building before the Ist January, 1939 can form the basis of the fixation of the basic rent only when the same building was in existence in similar circumstances during that period. It is further observed that identical will be the position with reference to the prevailing rate of rent for similar accommodation. From the evidence led by the parties it is evident that there is no building having similar facilities and furnishing in the locality on the basis of which the fair rent of the Air-lines Hotel can be fixed.

Now the question is, what should be the fair rent in such circumstances It is not necessary to elaborate the argument as it has been held time and again that, if there is no criteria for determining the fair rent of a building, the agreed rent between the parties should be treated as fair rent. In the above view, I am fortified by a decision of this Court in Civil Revision No. 600 of 1967 titled as Thakar Singh v. Rajinder Kumar C.R. No. 600 of 1967, decided on 31st July, 1970. It was held in that case that where the parties fail to prove, by evidence produced, the basic rent as required by Section 4(2)(a) and (b), the agreed rent may be fixed as the fair rent of the premises. Therefore, I am of the view that the conclusion of the authorities below that Rs. 1,600/- per month, the agreed rent, is the fair rent of the building and furnishing, is correct.

For the aforesaid reasons I do not find any merit in the revision petition and dismiss the lame. No order as to costs.