Lakhamshi Hiralal and Co. vs Damji Khimji and Co.

J.L. Nain, J.—This is a revision application under the provisions of section 115 of the CPC against an order dated April 30, 1964, passed by a Judge of the Bombay Small Causes Court, dismissing the petitioners'' ejectment application filed under the provisions of section 41 of the Presidency Small Cause Courts Act on the ground that the annual value of the premises at a rack rent exceeds Rs. 3,000 and, therefore, the Bombay Small Causes Court had no jurisdiction to entertain, try and determine the said application.

The petitioners are the tenants of a godown on the ground floor of Botawala building at Narshi Natha Street, Bombay-9, at a rental of Rs. 188 per mensem. By an agreement dated October 27, 1960, the petitioners granted leave and licence to the respondents to use and occupy a portion of the said godown at a licence fee of Ra. 260 per mensem. The petitioners claim to have terminated the said leave and licence and have filed an application u/s 41 of the Presidency Small Cause Courts Act in the Bombay Small Causes Court to evict the respondents from the said portion of their premises.

The respondents contended that the Small Causes Court had no jurisdiction to entertain, try and determine the application. It was contended by them that they were in law tenants and were paying Rs. 260 per mensem, i.e. Rs. 3,120 per annum. u/s 41 of the Presidency Small Cause Courts Act, an application for possession of immovable property can only be filed in the Small Causes Court when annual value at a room rent does not exceed Rs. 3,000.

The learned Judge held that the expression "rack rent" meant the rent raised to the uttermost or the full annual benefit of the property which, in this case, for the part of the premises in the occupation of the respondents was Rs. 3,120. The learned Judge held that the application was, therefore, not maintainable u/s 41 of the Presidency Small Cause Courts Act and he dismissed the said application. The petitioners have come in revision against the said order.

Now, section 41 of the Presidency Small Cause Courts Act provides as under:

When any person has had possession of any immoveable property situate within the local limits of the Small Cause Court''s jurisdiction of which the annual value at a rack rent does not exceed three thousand rupees, as the tenant, or by permission, of another person, or of some person through whom such other person claims such other person (hereinafter called the applicant) may apply to the Small Cause Court for a summons against the occupant, calling upon him to show cause, on a day therein appointed, why he should not be compelled to deliver up the property.

Whether the Bombay Small Cause Court would have jurisdiction to entertain this application depends, therefore, upon the interpretation of the expression "annual value at a rack rent" occurring in section 41 of the Presidency Small Cause Courts Act. No decision of any Indian High Court has been cited before me in which this expression has been interpreted. If what the respondents are paying to the petitioners for the part of the premises in the respondents'' occupation is taken into consideration, the amount will be Rs. 3,120 and the Small Cause Court will have no jurisdiction, but if what is paid by the petitioners to their own landlord, who is the owner of the premises, viz. Ks. 188 per mensem in respect of the entire premises in the occupation of the petitioners is taken into consideration, the annual rent will be Rs. 2,256 and if this is the annual value at a rack rent, the Small Cause Court will hare jurisdiction. In this case only a part of the promises let to the petitioners having been given to the respondents, the annual rent of the part will be even less than Rs. 2,256. But I am not considering this aspect of the matter, as even the entire rent of Rs. 2,256 is less than Rs. 3,000.

Stroud''s Judicial Dictionary defines "rack rent" as "rent of or approaching to the full annual value of the property out of which it ensues". En England, the expression "rack-rent" occurs or has occurred in Poor Law Amendment Act, 1834 and Towns Improvement (Ireland) Act, 1854 and in certain Public Health Act. In these Acts, the expression has been variously defined. This expression as occurring in the Housing Act, 1936 came up for interpretation in the case of Balance v. Croydon Corporation (1952) Q B 803 . There in interpreting the expression "rack-rent", it has been stated that in ascertaining the full net annual value the fact that the runt of the house is controlled by the Rent Restrictions Acts is to be taken into consideration, for they restrict the value of the house to the landlord, and since the standard rent of such a; house, plus statutory increases, is the full amount which the landlord can receive fact the tenant, that rent is the full net annual value of the house within the meaning of sub-section (4) of section 9 of the Housing Act, 1936. The following passage occurs in the judgment of Lord Justice Denning (pp. 812-813):

If the house is one which is within the Rent Restriction Acts, regard must, I think, be had be that fact. The ''full net annual value of the house'' is not to be calculated as if the Bent Acts did not exist. It is the full amount which a landlord can reasonably be expected to get from a tenant. He cannot reasonably be expected to get more than the Rent Restriction Act permit. If lie receives the full permitted amount ho is receiving the full annual value. He is receiving a rack-rent.

There is another passage in the judgment of Lord Justice Romer at p. 816 which reads as under:

In my opinion the legislature, in section 9, was applying itself to a factual and riot to a hypothetical position. If the standard rent is the greatest rent that ia obtainable in respect of any particular premises then it is the full rent of those premises, the rack-rent, notwithstanding that (and indeed because) the owner is restricted From receiving the higher rent which the premises, if uncontrolled, would command.

This will indicate that the annual value at rack-rent is to be based on "rent" even if that rent is controlled by Legislature and not on licence fees. The rack-rent has to be "rent" first before it becomes rack-rent. It can only mean gross rent and not net rent. In this particular case, the gross rent payable in respect of the premises by the petitioners as tenants to their own landlord, who is the owner of the premises, is Rs. 2,256 per annum, and this is the annual value of the premises at a rack-rent. The amount of Rs. 3,120 per annum paid by the respondents to the petitioners as licence fees is neither rent nor. rack-rent and cannot be the annual value at a rack-rent.

In my opinion, the Bombay Small Cause Court had jurisdiction to entertain, try and determine the petitioners'' application u/s 41 of the Presidency Small Cause Courts Act in respect of the premises and it has failed to exercise jurisdiction vested in it. The order dismissing the application is, therefore, set aside. The revision application is allowed. There will be no order as to costs. The matter is remanded to the Small Cause Court, Bombay, for disposal in accordance with the law. Rule made absolute.