Kunj Lal vs Madan Lal

The question that falls for determination in this case is as to whether a compromise between the parties arrived at in a civil court would serve as

estoppel from getting the fair rent fixed by the Controller under Sec. 8 of the J&K Houses & Shops Rent Control Act (hereafter called the Act).

The facts in brief are that respondent, Madan Lal, is the tenant of a shop owned by the petitioners. During an earlier civil proceeding in a suit for

dissolution of partnership and rendition of accounts, the parties entered into a compromise and an amount of Rs. 2400/ was agreed to be paid as

monthly rent. The respondent approached the Rent Controller for fixation of fair rent in accordance with Sec. 8 of the Act. The Rent Controller

(C.J.M) Jammu dismissed the application on the ground that the agreement executed between the parties before the civil court on 13.12.1989

estops the respondent from challenging the rent. The Rent Controller dismissed the application on 30.4.1994. Against this order an appeal was

preferred before the District Judge, Jammu, who, vide his order dated 15.04.1995, allowed the same and set aside the order of the Controller,

directing him to fix fair rent under Sec. 8 of the Act. It is this order which has been called in question in the present revision petition.

The Controller, as well as the District Judge, both have relied upon a case titled Avtar Singh Vs Sham Lal, decided by a Full Bench of this

Court and reported in AIR 1970 J&K 26. The proposition of law laid down by the Full Bench is the last word on the point involved. Their

Lordships have authoritatively held that there is no provision of law which either impliedly or expressly prohibits the parties from fixing a fair rent by

agreement nor does the Act lay any bar for the Controller from giving effect to such agreements. It was in this behalf that the plea of application of

doctrine of estoppel against the statute was rejected. Learned District Judge has caught hold of the nub of the matter of identifying the area of

distinction between the present case and Avtar Singh's case. In Avtar Singh's case, decided by the Full Bench, parties were very much before the

Rent Controller. It was during the pendency of a motion for fixation of fair rent before the Controller, that the parties agreed to compromise and

asked the Rent Controller to fix fair rent in terms of their agreement. Thus the parties dissuaded the Court from following the procedure laid down

in Sec. 8. The parties did not choose to lead evidence but, on the other hand, they asked the Court to pass the orders in terms of their agreed

stand. Their Lordships thus held that such a conduct of the parties would operate as an estoppel.

In the present case what the Controller has held to serve as estoppel for the respondent was an agreement arrived at by the parties in a civil

proceedings, independent of the Act. That makes the whole difference.

It is interesting to note that the agreement arrived at before the civil court describes an amount of Rs. 2400/ to be 'fair rent5. Besides this parties

have also entered into a written rent deed on 13.09.1989, wherein the amount was agreed to have been fixed voluntarily as 'fair rent.1 Mr. Kohli,

appearing for the petitioners, has vehemently argued that once the rent was admitted to be 'fair rent', the prayer for alteration of the same would he

barred by rule of estoppel. This, according to him, would be so irrespective of the consideration as to whether or not 'fair rent' was determined by

the Rent Controller under Sec. 8 of the Act.

I have heard the matter in extenso,

For the purpose of disposal of this petition, a cummulative reading of sections 2{2), 3&8 of the Act becomes imperative. Sec. 2(2) defines 'fair

rent as one determined in accordance with the provisions of Schedule 'A' or rent fixed under Sec.8 Under Sec.2(2) (b) 'fair rent' also includes the

rent which would have been fixed in case an application in terms of Sec. 8 would have been made. Sec. 2(2) (b) by all its implications holds only

that rent to be 'fair rent' which was either determined or which should have been determined if no motion for such determination was made. The

expression ""or which it would have been fixed if applications were made under said section"" also may enable us to call certain rate of rent to be

'fair rent' in case 'fair rent' in respect of the similar premises in the same locality has been determined. However, the fact remains that only that rate

of rent can be held to be 'fair rent' in respect of which formal finding by the authority under Sec. 8 has been recorded.

Power of fixing fair rent under the Act is vested in the Controller only. Therefore, adjudication of the matter by the Controller and that also on an

application by either of the parties, is a sine qua non for such fixation. The scheme of the Act makes it clear that over and above the Controller no

other person, not even a Civil Court, can determine 'fair rent'. The question as to whether or not civil courts have power to determine fair rent of a

house or shop arose in a Civil 1st Appeal, titled Ghulam Qadir Shora Vs Padama Devi, decided on 20.07.1971 by a Division Bench of this Court,

comprising of Ali C. J. and Bhat J, (as their Lordships then were). Their Lordships observed that a civil court has no power to pass a decree

determining 'fair rent' unless same is fixed by the competent forum on an application made by either of the parties.

The Act sets out a machinery for fixation of fair rent. It also prescribes a particular mode for doing so. A set standard is detailed out for

determining such fair rent. Sec.8 provides for a remedy, both to the landlord as well as to the tenant, for getting fair rent determined. It leaves the

power of determining fair and reasonable rent with the Controller the landlord may be aggrieved of penurious rate of rent fixed in good old times.

He may ask for enhanced rent keeping pace with escalations brought about from time to time. Likewise a hard pressed tenant, who at the time of

occupation of the premises, forced by the circumstances, agreed to any exorbitant rent, during the pendency of tenancy, may bring in a motion for

moderating the rate of rent by getting 'fair rent' fixed

In this behalf a reference to Sec.3 also will be pertinent. Sec. 3 makes an amount paid in excess of fair rent irrecoverable, notwithstanding that

there is an agreement between the parties to the contrary. Besides presupposing existence of an agreement between the parties, Sec.8 also

presupposes an inquiry by the Controller,

For purposes of making the rule of estoppel applicable in respect of fair rent, it is necessary that such 'fair rent' should have been determined

by the competent authority under Sec.8 of the Act. In this regard an inquiry, as envisaged by the Act, must have been held and the inquiry should

have been initiated on the application of either the landlord or tenant. Needless to mention that the Controller cannot suo moto initiate such inquiry.

If the parties to a dispute enter into an agreement between themselves before a forum other than the one prescribed by the Act or at their own

places, such agreements fall out side the purview of the Act and are brought about without any inquiry and by nonstatutory agencies. Therefore,

such agreement will not provide a launching pad for pleading estoppel. This is infact what their Lordships have impliedly laid down in Avtar Singh's

case (supra). It will be worthwhile for me to place on record that a compromise between the parties before a civil court is as good as an agreement

between them, of course, with a seal of such Court. Such agreements do not have any special force, as was laid down by their lordships of the

Supreme Court in A.I.R. 1967 S.C. 591.

The agreement between the parties in the present case has come into existence before a civil court in proceedings out side the ambit of the Act.

The mere fact that the agreed rate of rent has been termed as 'fair rent' in that compromise or a subsequent rent deed does not bring the same

within the meaning of 'fair rent' under the Act and cannot be held to be the basis for pleading estoppel for section 8 of the Act.

The learned District Judge, while interpreting Full Bench judgment in Avtar's Singh's case, has drawn correct conclusions. I do not find any

error of law or that of jurisdiction in the order impugned. Therefore, uphold the same and dismiss the revision petition.

Learned counsel for the parties are directed to appear before the Rent Controller on December 6,1996.