T.P. Chakravarthy vs Union of India (UOI) and Another

S. Bamachandra Ayyar, C.J.—The landlord of a bungalow situate in Bengali Bazaar Road, St. Thomas Mount, has filed this Civil Revision

Petition against the order of the Rent Control Authorities fixing fair rent for the premises. The bungalow in question which is situate within a

compound comprising an area of nearly 18 grounds was leased out by the Petitioner�s father in August 1940, to the Government of India for the

occupation by any officer attached to the military Garrison stationed nearby. The building is close to the military hospital, Alandur market, a school

run by a convent, Jain College and the railway station. It is abutting on the road from St. Thomas Mount to Meenambakkam. At the beginning of

the tenancy, the rent stipulated was Rs. 100 per month. Five years later the landlord took out proceedings under the Madras Buildings (Lease and

Rent Control) Act for fixation of fair rent and the rent was fixed by the appropriate authority at Rs. 160 per month. Subsequently the enactment of

1949 came into force. Again the landlord applied to the Rent Controller, Poonamallee, for fixation of fair rent. It was not his case, however, that

after the fixation of fair rent in the year 1945 no further improvements were effected to the property. Indeed the complaint of the Respondent is

that even necessary repairs were not being carried out regularly.

The Petitioner claimed that the fair rent for the building should be fixed at Rs. 750 per month. The Rent Controller in a very careful judgment

came to the conclusion that the increase in the fair rent fixed in 1946 was justified and after finding that the total cost of the building would be Rs.

67,634 and after making certain allowances for the amenities existing, he fixed fair rent at Rs. 338-17 nP. This order was affirmed on appeal; a

revision petition filed against the appellate order was unsuccessful. In this Civil Revision Petition Mr. Sriramamurthi appearing for the landlord has

challenged the correctness of the fair rent on the ground that there is a fundamental error on the part of the authorities below in approaching the

case. Learned Counsel has contended that the Tribunals below committed a serious mistake in considering certain advantages available to the

building in question as mere amenities and thereby proceeding to make allowance of only up to ten per cent of the capital invested in providing for

those amenities. They should have put no such limit for themselves. It was pointed out that in the building, in question, there are a number of electric

points, fans, compound wall, well, stair-cases, out-houses and above all vacant land appurtenant to the building to be enjoyed by the tenant, of

about 15� acres the capitalised cost of these items alone coming to Rs. 44,450. The authorities under the Act did advert to the existence of

these features but they held that not more than ten per cent of the cost should be taken as allowance to be made while assessing the value of the

building. The correctness of this approach is contested on the ground as not being warranted by the terms of Section 4 of the Act. Section 4

provides for the determination of fair rents, the relevant portions of which runs:

4(1) The Controller shall, on application by the tenant or the landlord of a building and after holding such inquiry as the Controller thinks fit fix the

fair rent for such building in accordance with the principles set out in Sub-section (2) or in Sub-section (3), as the case may be, and such other

principles as may be prescribed.

(2)(a) The fair rent for any residential building shall be at six per cent gross return per annum on the total cost of such building.

(b) The total cost referred to in Clause (o) shall consist of

(i) the cost of the construction as calculated according to such rates for such classes of residential buildings as may be prescribed less the

depreciation at such rates as may be prescribed;

(ii) the market value of that portion of the site on which the residential building is constructed;

and shall include such allowances as may be made for considerations of locality in which the residential building is situated, features of architectural

interest, accessibility to market, dispensary or hospital, nearness to the railway station or educational institution and such other amenities as may be

prescribed. Provided that such allowances shall not exceed ten per cent of the cost of construction as calculated in the manner specified in Sub-

clause (1).

Rest of the section omitted as unnecessary.

It is not disputed before me that the assessment of the cost of the building as well as the market value of the site occupied by it made by the

authorities is correct. What is contended, however, is that the amenities to which I referred just now should properly go into the calculation of the

cost of construction rather than be treated as mere amenities within the meaning of Section 4(2)(ii). Mr. Sriramamurthi argues that the expression

such other amenities as may be prescribed occurring in that clause should be read ejusdem generis with the other portions of the section--like

accessibility to the market, etc., and that they cannot relate to those matters which are akin to what is spent on the building itself. In this connection

learned Counsel has relied on Sub-clause (1) which refers to such other principles as may be prescribed for ascertaining the fair rent and submitted

that the advantages referred to above would come within them which should be added to the cost of the building as such. But admittedly no

principles have been prescribed for the determination of fair rent as such. Under the provisions of Section 4(1) fair rent has, only, to be fixed on the

basis of the cost of the building together with such allowance as amount spent on the amenities provided as can be made. The question is what are

the factors that have got to be taken into account for ascertaining the cost of the building. Learned Counsel in effect says that the cost of electric

installations as well as the amenities provided in the shape of open space round the main building should be regarded as contributing to the cost of

construction. I am unable to agree with that contention. Electric installations and open space round the building can only be regarded as amenities

provided for the convenient enjoyment of the building but they cannot be treated as parts of the building Sub-section (ii)(2) of Section 4

contemplates only cost of construction calculated according to such rate for such classes of residential buildings as may be prescribed plus the

market value of that portion of the site occupied by it. A building can exist with or without these advantages. When the advantages referred to

above are present they certainly add to the convenience of the enjoyment of the building. They should properly be regarded as amenities to the

building. Rule 10 of the rules framed under the Act says:

When calculating the cost of construction of residential buildings allowances shall be made for the following amenities in addition to those specified

in Section 4(2).

Electric installations and existence of vacant ground appurtenant to the building are all matters coming within them.

The rule itself treats them only as amenities and not as parts of the building. Therefore, the allowances that can be made under those heads

cannot by virtue of the proviso referred to above exceed beyond ten per cent of the cost of the construction of the building. I am unable to accept

the contention of learned Counsel for the Petitioner that such other amenities referred to in Section 4(2)(ii) should be read as ejusdem generis with

the previously mentioned advantages. These matters are connected with the situation of the building. Existence of open space round the building is

also a similar advantage. Indeed in one sense open space round the building can even be said to be an amenity of the kind referred to earlier in the

section. The word amenity means pleasantness of place. Air-conditioning apparatus, tube lights, electric points, garden, overhead tank, etc., would

certainly be amenities in that sense.

Generally in fixing the cost of a building in a locality various factors that enter into the cost to the owner besides the actual cost of construction,

are taken into account. But the Act and the rules thereunder have prescribed a particular method of calculation the policy of the Legislature seems

to be that the landlord should not be allowed to increase the rent for the building by providing too costly amenities and thereby inflate the rent. The

statute has, therefore, wisely restricted the increase of allowances by reason of the amenities to ten per cent of the cost of the construction. The list

of amenity provided in the section is by no means exhaustive. It is clear from the terms of the section itself that the expression such other amenities

referred to in the section cannot be read as ejusdem generis with what has been mentioned previously and that it will comprehend all those

advantages which add to the pleasantness in the enjoyment of the building. Existing improvements in the shape of vacant space round the building,

electric points, etc., can only be regarded as amenities if they exist not more than ten per cent of the cost of the building could be allowed. This is

what the Tribunals below have held. The Civil Revision Petition is, therefore, without any merits and is dismissed with costs.