Ranganayaki Ammal vs M. Chockalingam

R. Sadasivam, J.—Petitioner Ranganayaki Ammal has been convicted u/s 7(2)(a) of the Madras Buildings (Lease and Rent Control) Act,

1960, read with Section 33(1) of the said Act, hereinafter referred to as the Act, and sentenced to pay a fine of Rs. 25 in default simple

imprisonment for five weeks. The finding of the Fifth Presidency Magistrate is that the agreed rent was Rs. 25 per month and that the petitioner

committed the offence by demanding a higher rent of Rs. 34 per month. Section 7(2)(a) of the Act is as follows:

Where the fair rent of a building has not been fixed the landlord shall not claim, receive or stipulate for the payment of, any premium or other like

sum in addition to the agreed rent.

Thus, what is prohibited is only a claim by a landlord for any premium or other like sum, and not rent. The landlord is entitled to receive a month''s

rent by way of advance but as it would amount to premium, a proviso has been added to enable the landlord to receive, or stipulate for the

payment of, an amount not exceeding one month''s rent, by way of advance. But for such proviso it would be possible to contend that the landlord

would be committing an offence by receiving a month''s rent as advance, as it would come within the word '' premium''.

The matter is so free from doubt that it does not really require any discussion'' of the first principles or decisions. u/s 105 of the Transfer of

Property Act, a lease of immovable property is defined as a transfer of a right to enjoy such property, made for a certain time, express or implied,

or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered

periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. In the same section it is stated

that the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. Thus, '' premium '' is defined

in Section 105 of the Transfer of Property Act as the price paid or promised for a lease. In Shorter Oxford English Dictionary, Volume II, Second

Edition, at page 1570 '' premium '' has been defined as a reward given for some specific act or as an incentive; a price. In a note under the

definition it is stated that if no premium were allowed for the hire of money, few parsons would care to lend it. In Wharton''s Law Lexicon,

Fourteenth Edition, at page 791 '' premium '' is defined as a consideration; something given to invite a loan or a bargain; the consideration paid to

the assignor by the assignee of a lease, etc. In Vithal Krishnaji Mvendkar v. Parduman Ram Singh (1963) M.L.J. 517 it is stated that the word ''

premium'' means any amount paid for the purpose of getting a lease. It was held in that decision that if donation has been received in respect of the

granting of the lease and not as a free donation for the advancement of the purposes of the Sangh, it will come within the expressions ''premium'' or

'' consideration '' in Section 18 of the Bombay Rents, Hotel and Lodging House Rates Control Act. The word '' premium '' has been considered in

Abdul Rahim v. State ILR (1961) Mad. 1243 It was pointed out in that decision that the scope of the words ''other like sum'' has to be

understood in the light of the doctrine of ejusdem generis. It was held in that decision that the deposit of a large sum of money free of interest,

which was liable to be returned at the end of the term of lease, is not a '' premium.'' It is unnecessary to consider the correctness of this view in this

case. But it is clear from what I have staled that there is a clear distinction between '' rent'' on the one hand and '' premium'' or '' other like sum '' on

the other.

In Cheshire''s Modern Real Property, Eighth Edition, at page 883 it is pointed out that the whole policy of the Rent Control Act could obviously

of frustrated if a landlord were permitted to extract a premium from the tenant on the grant of a tenancy. It is on account of this danger premiums

are prohibited. It is pointed out by the same author that though the English Rent Control Act does not define a premium, it states that it includes any

fine or other like sum and any other pecuniary consideration in addition to rent. The implication, therefore, is that it does not include rent.

u/s 6 of Madras Act XV of 1946 the landlord was prohibited from receiving anything in excess of fair rent and any violation was made

punishable under the said Act. There was no provision in that Act corresponding to Section 7(2) of the present Act which was introduced only by

Madras Act VIII of 1951 amending Madras Act XXV of 1949. The demand for higher rent alleged to have been made by the petitioner is not a

demand for '' premium '' or '' other like sum '' within the meaning of Section 7(2)(a) of the Act and the conviction of the petitioner cannot therefore

be sustained.

There is a distinction between Section 7(1) and Section 7(2)(a) of the Act. Under the former clause a demand for anything in excess of fair rent

is punishable and this distinction has been pointed out by Venkataraman, J. in Poolatnadai P. Subbier v. Madura Soureshtra Sabha 79 L.W. 22.

Venkataraman, J. has referred to several decisions and in particular to the decision reported in Aswathanarayanaiah v. Sanjeeviah (1964) 1 An.

W.R. 69 where it is pointed out that so long as fair rent is not fixed the parties are at liberty to enter into a contract. There is nothing illegal in a

landlord asking for higher rent so long as fair rent has not been fixed. If the tenant does not agree to pay it, the remedy of the landlord may be only

to file a petition for fixation of fair rent. But the mere demand of rent higher than the agreed rent cannot amount to an offence and it is certainly not

an offence u/s 7(2) read with Section 33(1) of the Act. In fact, one can visualise cases where the agreed rent may be very much less than the fair

rent and it could not be said that the landlord would be acting illegally in demanding higher rent as fair rent before moving the Rent Controller for

fixation of fair rent.

For the foregoing reasons the conviction of the petitioner is totally unjustified and it is set aside. The fine amount, if collected, from the petitioner

is ordered to be refunded to her.