O.S.M. Salih vs A.M. Salih

Srinivasan, J.—The landlord is the petitioner. The premises in respect of which the petition under S. 4 of the Madras Buildings (Lease and Rent Control) Act was filed, had originally been let out on a monthly cent of Rs. 50, the then tenant agreeing to pay the municipal tax in addition. The premises is non-residential and the business which was carried on therein was transferred in 1948 to the present tenant. The then owner of the property stipulated for an enhanced rent of Rs. 100, and the tenant agreed to pay. The petitioner purchased the property in 1951. He demanded a further enhancement of rent, and the tenant agreed to pay a monthly rent of Rs. 120 and also to bear the municipal tax. The tenant then moved the Rent Controller for fixation of the fair rent, contending that according to the provisions of the Act, a rent of about Rs. 58 alone could be fixed, as fair rent. The landlord opposed the petition and the principal contention he advanced was that since the parties had amicably agreed to a sum as the proper and reasonable rent in the circumstances of the case and this agreement had also been operative for some years prior to the filing of the petition, the tenant was not entitled to any relief by the fixation of rent at a lower figure. The learned Rent Controller after examining the evidence, thought that, since the tenant had been paying the agreed rent of Rs. 120 without protest during the past six years and no objection had been raised by him till the landlord sought to evict him in certain other proceedings, and having regard also to the fact that similar buildings in the locality fetched higher rents, the contention of the landlord that the rent of Rs. 120 per month was not excessive, could be accepted. The tenant appealed and the appellate authority did not think it fit to interfere with the order of the Controller. But, on revision, the learned District Judge took a different view. He held that S. 4 of the Act provided for certain matters to be taken into consideration when fixing the fair rent. He found that both the Rent Controller and the appellate authority had erred in regarding the prevailing rents as on the date of the petition as material facts for the purpose while the section in specific terms provided the rate of rent prevailing during the 12th months prior to 1st April, 1940, as the relevant basis. He distinguished certain decisions that were placed before him in this connection, and pointed out that, In those cases, the question of the application of the above part of the provision did not arise. Taking, therefore, the circumstances specified in S. 4 (2) of the Act, and applying also S. 4 (4) of the Act, which related to the enhancement allowable in respect of non-residential buildings, the learned District Judge fixed the rent at Rs. 68-12-0.

This revision petition has been filed by the landlord, contending that the Court below exceeded its jurisdiction in interfering with the concurrent findings of the appellate authority and the Rent Controller.

The principal argument advanced on behalf of the landlord before us has been that the learned District Judge erred in relying on the municipal valuation of the property as the only relevant feature, and that further, when the parties had agreed as to the proper rate of rent at a particular figure and when that agreement had been in force for a long number of years, that should be taken as an unmistakable indication of the prevailing rates of rent and of its essential fairness. The question we have accordingly to decide is whether the above contentions would justify the fixation of the fair rent at the figure agreed to by the parties or whether the statute has laid down a basis for such fixation which must override the agreement between the parties.

Section 4 (2) of the Act states:

In fixing the fair rent the Controller shall have due regard--

(a) to the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during the 12 months prior to the 1st of April 1940;

(b) to the rental value as entered in the property tax assessment book of the Municipal Council, Local Board or the Corporation of Madras, as the case may be relating to the period mentioned in Cl. (a);

(c) to the circumstances of the case including any amount paid by the tenant by way of premium or any other like sum in addition to rent after the 1st April 1940.

It will be noticed that, in each of the above Cls. (a), (b) and (c), a date line has been set, namely, that the features relevant to each of these clauses should be considered as on the 1st April 1940. In fact, Cl. (a) states that the prevailing rates of rent for the same accommodation during the 12 months prior to 1st April 1940, should be a relevant circumstance to be taken into consideration. It is obvious that the statute, in fixing that date, definitely prohibits the taking into consideration of the prevailing rate of rent as on a subsequent date. On behalf of the petitioner-landlord, reference is made to Cl. (c), which indicates the "circumstances of the case" to be taken into consideration and it appears to be the argument that one such vital and controlling circumstance would be any agreement between the landlord and the tenant, stipulating an increased rent, and it is suggested that such agreements, and, particularly when they have been in force for a number of years, should form a very strong indication of the fairness of the rent so fixed by mutual agreement. But this clause does not refer to circumstances of that nature. It has special reference to any amount paid by the tenant by way of premium or any other like sum in addition to rent; that is to say, with regard to the municipal tax or repairs or such other requirements, the tenant had agreed to pay any sum over and above the rent after 1st April 1940, that could be taken into account in the fixation of a fair rent. It is therefore incorrect to say that S. 4 (2) (c) can be interpreted so as to suggest that the agreement between the parties would prevent the operation of S.4.

A judgment of this Court in C. R. P. No. 89 of 1957 has been brought to our notice. That was a case, where the tenant was paying a rent of Rs. 300 per month. Another tenant who took up the tenancy, agreeing to pay the same rate of rent, filed an application for the fixation of fair rent. The Rent Controller fixed the agreed rent as the fair rent, while the appellate authority reduced it to Rs. 225 per month. The landlord''s contention in that case was that, after purchasing the property for a sum of Rs. 9,000, he had spent a further sum of Rs. 30,000 in its reconstruction. The appellate authority fixed the rent of 225 on the basis that, the value of the building being Rs. 30,000, the rent could be fixed on a computation of 9 per cent interest on such capital value. This Court found that the appellate authority had ignored the value paid by the landlord for the purchase of the building, and, adopting the same method of computation as the appellate authority, fixed the fair rent at Rs. 300 per month. This decision is certainly not an authority for the position that the agreement between the parties should be taken into account to the exclusion of the provisions of the statute.

It is not denied that, in the present case, the prevailing rate of rent for the same premises during the period of 12 months prior to 1st April 1940 was Rs. 50 per month in addition to the payment of municipal tax by the tenant. It is not also denied that the rental value of the property as entered in the municipal registers was Rs. 48. The only extent to which S. 4 (2) (c)would apply to the present case is the fact that, in addition to the rent, the tenant in occupation of the premises had agreed to meet the claim for municipal taxes upon the property. It should therefore follow that, in fixing the fair rent, it is only these three factors that are set out in S. 4 (2) that can be taken into consideration. If the intention of the Legislature was that any agreement arrived at between the landlord and the tenant should hold the field and should be respected, it could have provided that the provision--S. 4 (2)--should apply in the absence of such an agreement. It is notorious that residential and nonresidential accommodation are hard to secure and the object of the Act is to relieve the tenants from oppressive rack-renting by the landlords. It is to mitigate the difficulties of tenants, and, at the same time, provide for a reasonable return to the landlord that S. 4 has been enacted. It was not the intention of the Legislature that either the agreement between the parties or the so-called prevailing rates of rent in respect of similar accommodation as on the date of the application should be the governing feature for the fixation of fair rent. The provision is, to our minds, specifically intended to relieve the tenant from any agreement which he might be compelled to enter into, to his disadvantage, by the landlord, stipulating for a high rent, taking advantage of the tenants'' pressing need for accommodation.

Having arrived at a finding with regard to the prevailing rate of rent on the basis of S. 4 (2), the statute authorises the Rent Control Authorities to allow an enhancement on the principles set out in Sub-Ss. (3) and (4) of S. 4. We are concerned with Sub-S. (4), which states that in fixing the fair rent of non-residential buildings, if the rate of rent or rental value referred in Sub-S. (2) does not exceed Rs. 50 per month, an increase not exceeding 37� per cent on such rate or rental value could be allowed. This applied to non-residential buildings which had been constructed before 1st April 1940, and it is this allowance of 37� per cent, that the learned District Judge has granted in the present case.

We are satisfied that the learned District Judge was entitled to interfere under S. 12-B of the Act for the reason that both the Rent Controller and the appellate authority had ignored the provisions of S. 4 of the Act in fixing the rent at Rs. 120 on the basis of the prevailing rates of rent as on the date of the application or on foot of the agreement between the landlord and tenant. There was no excess of jurisdiction on the part of the learned District Judge applying the correct provisions of the law to the case on hand. The contention of the landlord that the agreement between the parties should prevail was rightly rejected and it is not the complaint of the landlord before us that, in fixing a sum of Rs. 68-12-0 as the rent in the instant case, there has been any error. The petition fails and is dismissed with costs.