Malik Chand vs Ram Sarup Gupta

R.S. Mongia, J.—This Civil Revision has been referred to a larger Bench as the correctness of the judment in Sant Lal v. Hira Lal, 1936 H.R.R. 273. 1976 was doubted by the learned Single Judge.

It would be appropriate to briefly state the facts leading to this reference which are in a very narrow compass. The landlord Ram Sarup filed an application for the fixation of fair rent u/s 4(2)(a) of the Haryana Urban (Control of Rent & Eviction) Act, 1973 (hereinafter called the Act) against the tenant Malak Chand on 2nd March, 1985. According to the landlord; Lakhmi Chand, brother of tenant Malak Chand, took the demised premises on rent at the rate of Rs. 15/- per month besides house-tax on 1st September, 1953. Subsequently, Malak Chand, the petitioner in this case, took over the lease rights and the possession of the shop in dispute from Lakhmi Chand and the landlord accepted him as the tenant with effect from 1st September, 1960, at the same rate of rent. Later on, on 1st October, 1962, the rent was enhanced to Rs. 22/- per month besides the house tax. In his petition for fixing fair rent, the landlord had mentioned that the rent prevailing in the locality for similar buildings was Rs. 300/-per month during the year 1962 and since the general level of prices had risen manifold, the basis rent as well as the fair rent of the demised premises were required to be determined by the Rent Controller The stand taken by the tenant in the written statement was that in the beginning the shop was let out at Rs. 16/- per month; whereas it was enhanced to Rs. 22/- in the year 1962. It was averred by him that the rent of similar buildings in the locality was not more than Rs. 30/- per month. Hence, the fair rent was not to be fixed more than Rs. 30/- per month. The learned Rent Controller after appreciation of the evidence on record found that the rent for the similar buildings prevailing in the area where the shop in dispute was situated was Rs. 100/- per month in the year 1962. Therefore, the basic rent of the shop was determined at Rs. 100/-per month and after applying the wholesale price index as per the formula laid down in the Act, the fair rent was determined by the Rent Controller to be Rs 225/- per month. In appeal, at the instance of the tenant, the learned Appellate Authority affirmed the findings of the Rent Controller The landlord had also filed an appeal for increasing the amount of fair rent before the Appellate Authority His appeal was also dismissed Dissatisfied with the above said order, both the parties filed two separate revision petitions in this Court Civil Revision No 2012 of 1987 has been filed by the tenant; whereas Civil Revision No. 2268 of 1987 has been filed on behalf of the landlord.

Before proceeding further, it would be necessary to mention that Section 4(2) of the Act, which deals with the determination of fair tent, was substituted by a new Sub-section by Haryana Act No. 14 of Prior to the amendment, Section 4(2) reads as under :--

"4(2)--In fixing the fair rent under this section, the Controller shall first determine the basic rent which shall be the rent agreed upon between the landlord and the tenant preceding the date the application in respect of the building or rented land, or where no rent has been agreed upon, the basic rent shall be determined on the basis of the rent prevailing in the locality for similar building or rented land at the date of application."

After-She amendment by Haryana Act No. 14 of 1976, Section 4(2) of the Act was substituted as follows:--

"4(2) In using the fair rent under this section, the Controller shall first determine the basic rent which shall be.-

(a) In respect of the building the construction whereof was completed on or before the 31st day of December, 1961 of land let out before the said date, the rent prevailing in the locality for similar building or rented land let out to a new tenant during the year 1962; and

(b) in respect of the building the construction whereof is completed after the, 31st day of December, 1961 or land let out after the said date, the rent agreed upon between the landlord and the tenant preceding the date of the application, or where no rent has been agreed upon, the basic rent shall be determined on the basis of the rent prevailing in the locality for similar building or rented land at the date of application."

The learned counsel for the tenant-petitioner submitted earlier when the matter was referred to a larger Bench end even before us that the present case is covered by Sub-section 2(a) of Section 4 of the Act and the basic rent in respect of building, construction whereof was completed on or before 31st day of December, 1961, shall be the rent prevailing in the locality for the same building let out to new tenant during the year 1962. According to the learned counsel, since the very premises in dispute were let out to the tenant petitioner on 1st October 1962, at the rate of Rs. 22/- per month, no other evidence was required to be gone into and that Rs. 22/ per month would be taken to be the basic rent of the premises in question and, Accordingly, the fair rent should be determined after taking the basic rent to be Rs. 22/- per month. In support of this contention, he relied on a judgment of learned Single Judge in Sant Lal''s case (supra), and drew our pointed attention to the following observations in the judgment :--

"In this case we are not to find out the rent prevailing in the locality for the similar building daring the year 1962 as there is definite evidence that on 1st April, 1964, a fresh rent note was executed between the parties where under Rs. 15/- was agreed rate if rent. If from 1956 to 1964 rent was Rs. 15/- per month, it can safety be taken that during 1962 also rent was Rs. 15/- per month. Therefore, this would be the basic rent."

The above-mentioned observation does support the contention of the learned counsel for the tenant. However, we find that this Judgment does not take note of the fact that after the amendment of Section 4(2)(a) of the Act by Act No. 14 of 1976 the amendment which was introduced was that the basic rent in respect of a building the construction where of was completed on or before 31st day of December. 1961, the rent prevailing in the locality for similar buildings let out to a new tenant during the year 1962. The words "new, tenant" have to be assigned significant meaning. "New tenant" means a tenant who takes on rent a building for the first time and this expression "new tenant" would not cover an old tenant who might enter into a fresh tenancy as that would be a renewed tenancy on new terms, but the tenant will not be a new tenant. Otherwise also an old tenant would not raise that much rant of the premises which he is occupying while renewing the tenancy as the same building would get if a wholly new tenant is inducted therein. That is why the Legislature has;, used the words "new tenant" while amending Section 4(2)(a) of the Act. The revised agreed rent of an old tenant would not be the rent which is prevailing in the locality for the similar building, which is let out to a new tenant during the year 1962.

It will be pertinent to mention here that the Legislaure while substituting old Section 4(2) of the Act, divided the buildings in two parts for determination of fair rent, viz. (i) those buildings which were completed on or, before 31st day of December, 1961 and (ii) The buildings which, were completed after the, 31st day of December, 1961. The Legislature in the second category of buildings has provided that for determination of the basic rent, the agreed rent between the landlord and the, tenant proceeding the date of application may be considered as the basic rent but this criteria of determination of basic rents to be the agreed rent has not been provided in the first category of buildings. In other words the agreed rent which may be agreed upon between the landlord and the tenant while renewing the tenancy cannot be taken to be the basic rent for the buildings which were completed before 31st day of December, 1961. For such buildings the basic rent is to be determined, on the basis of the prevailing rent in the locality for the similar building which is let out to a new tenant during the year 1962.

In view of what has been stated above, we hold that Sant Lal''s case (supra) does not lay down correct proposition of law and we hereby overrule the sgme.

The basic rent of the demised premises had been correctly determined, by the Rent Controller to be Rs. 100/- and, consequently, the fair rent to be Rs. 225/- per month. This finding has been upheld by the Appellate Authority. This is a pure finding of fact which has been arrived at after appreciation of the evidence on the record and we find no ground to interfere with the same. As a consequence of what has been held above, both the revision petitions C.R. No. 2012 of 1987 and C.R. No. 2268 of 1987 are hereby dismissed. However, the parties are left to bear their own costs.