UCO Bank vs kamesh Chand Bhuta and Others

T.S. Doabia, J.

In this miscellaneous Appeal the U. C. O. Bank is aggrieved against the determination of standard rent under the Madhya Pradesh Accommodation Control Act. 1961 (here-in-after referred to as the Act. An accommodation which was initally let out to it for a sum of Rs. 250/- would now be available to it for Rs. 1800/-. This is because Rs. 1800/- is the standard rent fixed for the building in question.

The relevant provision which deal with the assessment of standard rent are contained in section 7, 8. 9. and 10 of'' the Act. These provisions read as under :-

Standard rent. - "Standard rent" in relation to any accommodation means -

(1) Where reasonable annual rent or fair rent has been fixed by a competent authority under the repealed Act or prior to the commencement of the repealed Act, as the case may be, by a competent authority under the enactment for the time being in force, such reasonable annual rent or fair rent;

(2) (i) Where the accommodation was let out on or before the 1st day of January, 1948, and the reasonable annual rent or fair rent has not been so fixed, the rent of that accommodation as shown in the Municipal Assessment Register or as was realised on the 1st day of January, 1948 whichever is less: or

(ii) Where the accommodation was not let out on or before the 1st day of January, 1948, the rent of that accommodation as shown in the Municipal Assessment Register or as could be realised on the 1st day of January, 1948, whichever is less;

Increased :-

(a) In the case of residential accommodation and accommodation used for education purposes by thirty-five percent of such rent;

(b) in the case of other accommodation, by seventy per cent of such rent; and

(c) in the case the tenant is not liable to pay the municipal tax and there has been any increase in municipal tax subsequent to 1st day of January, 1948, (by an amount equal to such increase);

Provided that the increase specified in paragraphs (a) and (b) shall be permissible only if the accommodation has been kept in good and tenantable repairs :

(3) in case of accommodation not falling under clause (1) of (2) above.-

(a) if the accommodation is separately assessed to municiapl assessment, the annual rent according to such assessment plus fifteen per cent thereon;

(b) if only a part of the accommodation is so assessed, the proportionate amount of the annual rent for the whole accommodation according to such assessment plus fiteen per cent thereon;

(c) if the accommodation is not so assessed.-

(i) the annual rent calculated with reference to the rent agreed upon between the landlord and the tenant when such accommodation is first let out. and if it has not been so let out, to such amount for which it could be let out immediately after its construction was completed: or (ii) the annual rent calculated on the basis of annual payment of an amount equal to 6-3/4 percent per annum of the aggregate amount of the actual cost of construction and the market price of the land comprised in the accommodat ion on the date of the the commencement of the construction :

whichever is less.

Lawful increase of standard rent in certain cases and recovery of other charges. -

(1) Where a landlord has, at any time before the commencement of this Act with or without the approval of the tenant or after the commencement of this Act with the written approval of the tenant or of the Rent Controlling Authority, incurred expenditure for any improvement, addition or structural alteration in the accommodation not being expenditure on decoration or tenantable repairs necessary or usual for such accommodation, and the cost of that improvement, addition or alteration has not been taken into account, in determining the rent of the accommodation, the landlord may lawfully increase the standard rent per year by an amount not exceeding ten per cent of the rent payable, for the time being.

(2) Where a landlord pays in respect of the accommodation any charge for electricity or water consumed in the accommodation or any other charge levied by a local authority having jurisdiction in the area which is ordinarily payable by the tenant, he may recover form the (sic) the amount so paid by him, but the landlord shall not save as provided in section 7. recover from the tenant whether by means of an increase in rent or otherwise, the amount of any tax-on building or land imposed in respect of the accommodation occupied by the tenant.

Provided that nothing in this sub-section shall affect the liability of any tenant under an agreement, whether express or implied, to pay from time to time the amount of any such tax as aforesaid.

Notice of increase of rent. -

(1) Where a landlord wishes to increase the rent of any accommodation, he shall give the tenant notice of his intention to make the increase and in so for as such increase is lawful under this Act, it shall be due and recoverable only inrespect of the period of the tenancy after the expiry of thirty days from the date on which the notice is given.

(2) Every notice under sub-section (1) must be in writing signed by or on behalf of the landlord and either be sent by registered post acknowledgment due to the tenant or be tendered or delivered personally to him, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the accommodation.

Rent Contolling Authority to fix standard rent, etc. - (1) The Rent Contolling Authority shall, on an application made to it in this behalf, either by the landlord or by the tenant, in the prescribed manner, fix in respect of any accommodation-

(i) the standard rent in accordance with the provisions of section 7; or (ii) the increase, if any, referred to in section 8.

(2) In fixing the standard rent of any accommodation or the lawful increase thereof, the Rent Controlling Authority shall fix an amount which appears to it to be reasonable having regard to the provisions of section 7 or section 8 and the circumstances of the case.

(3) In fixing the standard rent of any accommodation part of which has been lawfully sub-let, the Rent Controlling Authority may also fix the standard rent of the part sub-let.

(4) Where for any reason it is not possible to determine the standard rent of any accommodation on the principles set forth under section. 7, the Rent Controlling Authority may fix such rent as would be reasonable having regard to the situation, locality and condition of the accommodation and the amenities provided therein and where there are similar or nearly similar accommodations in the locality, having regard also to the standard rent payable in respect of such accommodations.

(5) The standard rent shall be fixed for a tenancy of twelve months Provided that where the tenancy is from month to month or for any period less than a month, the standard rent for such tenancy shall bear the same proportion to the annual standard rent as the preriod of tenancy bears to twelve months.

(6) In fixing the standard rent of any accommodation under this section, the Rent Controlling Authority shall fix the standard rent thereof in an unfurnished state and may also determine an additional charge to be payable on account of any furniture supplied by the landlord and it shall be lawful for the landlord to recover such additional charge from the tenant.

(7) In fixing the standard rent of any accommodation under this section, the Rent Controlling Authority shall specify a date from which the standard rent so fixed shall be deemed to have effect :

Provided that in no case the date so specified shall be earlier than thirty days prior to the date of the filing of the application for the fixation of the standard rent.

(3) It is well settled that in case, a building is not covered by the provision of section 7, then the standard rent has to be fixed u/s 10 (4). For doing so, the rents prevailing in the locality are to be taken into consideration.

(4) It be seen that section 7 of the Act is not attracted to the facts of the case. This building was constructed in the year 1962. It was let out to the appellant in July 1964. This building consists of three stories. The basement area is 1320 s. ft. The ground floor is 1680 s. ft. where as the first floor has an area of 2840 s. It.

(5) The learned counsel for Bank has argued that the standard rent has not been fixed in accordance with the statutory provisions contained in the Act. Following arguments have been raised.-

(i) that the S. D. O. has no jurisdiction to adjudicate upon this dispute.

(ii) that the rental should have been fixed u/s. 7:

(iii) that a notice having been given by the landlord claiming lesser rent that should be the basis for determining the rent.

(6) So far as the question of jurisdiction is concerned, this was not urged'' before the Court below. As such, it would not be appropriate to permit the appellant to raise this point for the first time in appeal. Apart from this, all. S. D. Os have been conferred with the power to entertain to hear and dispose of application seeking fixation of fair rent, the ratio of the dicision reported as Bhikam Chand Kochar v. Uttam Chand, (1972 JLJ SN 61). would be squarely attracted to the facts of this case In this view of the matter, simply because the authority deciding an application tailed to describe itself as S. D. O. would not furnish a ground to the petitioner to contend that the order has not been passed by the competent authority.

With regard to the question as to whether standard rent can be fixed u/s 7, or u/s 10 (4) the position is clear. This is a building which cannot be said to be covered by section 7 (3) (c) of the Act. The judicial pronouncements are to the effect that unless and until a building can be subjected to fixation of standard rent by either of provisions of the Act, the provisions of Section 10 cannot be resoreted to. For this reliance has been made to the following decisions of this court :

Laxman das v. Barfibai 1972 JLJ 32 Sardar Karan Singh v. Smt. Prem Kaur Ahuja, 1984 MPRCJ. Note 95. Dulichand Sharma v. Dhannalal, 1988 MPWN 17; Chhogalal Vs. Shushil Chand, .

(7) In Laxmandas v. Barfibai case (Supra), it was observed as under :-

it is clear from the aforesaid sub-section that it is attracted where it is not possible for the Rent Controlling Authority to determine the standard rent in accordance with the principles set forth in section 7. Section 7 covers all sorts of accommodation and it apears to us that the only situation in which sub-section (4) of section 10 will be attracted is when both the criteria laid down in section 7 are not proved. In fact learned counsel for both the sides were unable to point out to us any other situation in which this sub-section may be attracted.

Thus reading sub-section (4) of section 10 with section 7 it would appear that both the criteria laid down in Clause (2) and Sub-clause (c) of Clause (3) of section 7 are essential and vital for the determination of standard rent and where either of them is missing, it. is not possible to determine the standard rent on the principles setforth therein and the case would fall under sub-section (4) of section 10 which provides for the determination of the standard rent on the basis of the situation, locality, condition etc., and the standard rent payable for a similar accommodation in the vicinity.

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It may here be noted that under the old Act 1955 there was no provision corresponding to sub-section (4) of section 10 of the present Act. In the absence of such a provision it could be contended that various modes for determining "reasonable rent" provided in Clause (e) of section 3 of the Act of 1955 alternative modes and the reasonable rent could be determined in accordance with any one of them where the evidence relating to other modes was not available, but in view of the provisions of sub-section (4) of section 10 of the present Act it is clear that where the evidence relating to both the criteria is not available the standard rent must be determined in acordance with the principles laid down in sub-section (4) of section 10 of the present Act.

Thus in our view, it would not be correct to hold that the determination of standard rent with reference to the rent entered in the Municipal Assessment Register u/s 7 is only one of the various alternatives and it is open to the Rent Controlling Authority to determine the rent on the basis of any of the alternatives. In our view such a construction would render the provisions of sub-section (4) of section 10 of the present Act otiose and will also give a very restrited meaning to the expression '' which ever is less'', in section 7 of the Act. It is settled principle of construction of statutes that they should be so construed as not to render any part thereof redundant or meaningless.

As such standard rent has to be fixed in terms of Section 10 of the Act. This aspect be examined.

In order to fix basic rent or the standard rent the Controller has to take into consideration the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances. ''Similar'' means having sameness in essential particulars. It denotes sameness in all essential particulars. It is an enquiry relating to a subject abounding in uncertainties where there is more than ordinary guess work and where it would be very unfair to require an exact exposition of reasons for the conclusions arrived at. It is not an algebraic problem which can be solved by an abstract foumula. Certain amount of conjecture is inevitable, but Court should be careful not to go too far in this direction. This no doubt in recognised method of determining rent, but, is subject to the defect that no two pieces of property can be precisely similar in all their circumstances and conditions. There must always be some difference though of varying degrees and no hard and fast rule can be laid down as to the allowaces to be made for such differences. Valuation is not an exact science. A comparison with other premises can only be allowed if they are comparable units and if they are similar in situation user, extent or amenities. It may be necessary and profitable for the Court to look into evidence of accommodation which is more or less similar on the question of amenities. After independence, India has made rapid progress in the industrial fields, with the result that shortage of accommodation in commercial and industrial places, which are usually urban areas, has increased several fold. This prosperity has also raised cost of construction. In order, therefore to construe the expression ''similar circumstance'' with an eye co promote the object and purpose of the Act and to remedy the mischief created by shortage of accommodation in urban areas, the Court has consistently with purpose of affording the required protection to the tenants, to see that capitalists, or, those with money, are not unduly discouraged from further construction of buildings. This aspect was noticed by a bench of Punjab High Court in Balkishan Vs. Subash Chand. ILR (1961) Punjab 262. Keeping in view this consideration, which is of no small importance in this revolutionary change of circumstances, I. D. Dua J, (later Judge of Supreme Court of India) in Chanan Singh Narain Singh Vs. Sewa Ram Sukhdial, was disinclined to hold that Legislature could have intended by using the expression "similar" circumstanes not to have visualised the improvements of civic amenities in a given locality. Their being no fixed, rigid or certain means uniformally assignable to the expression "similar circumstances" It was observed that the Court should come to arealistic solution of the problem which is not to be restricted by any cannon of principle of interpretation. According to the learned judge to accede to the tenant''s extreme contention would lead to starling consequences which may well clothe the statutory insturment with an unreasonable harsh and oppressive character, which in the absence of clearest expression would not be impurtable to the Legislature. It was accordingly held that the expression similar circumstances'' should not be extended to a situation where the locality in question had undergone drastic change in the matter of civil amenities like drainage, sanitation, supply of electricity, educational institutions, hospitals. Post office and the like.

It be noted that in Charan Singh V. Sewa Ram. AIR 1966 P. R. 387, three questions were formulated for reference to the Full Bench :

What is the import of the words ''"in similar circumstances" in Clause (a) of sub-section (2) of Section 4 of the East Punjab Urban Rent Restriction Act of 1949 ?

Do the above words'' in similar circumstances'' govern the work ''same'' in addition to qualifying the words ''similar accommodation''?

Does the development of an area denote a change of circumstances for the purpose of the above clause ?

12 It be ''seen that clause (b) of the Punjab Act could not applied because no property tax was levied in 1938. It was found by the Appellate Authority that prior to the year 1939 at the site of the market in question there existed the boarding house of missionary school and there were a few shops'' in the neighbourhood rented at Rs. 4.00 or so per mensem. It was also found that the town had developed in recent years in general and by the establishement of a number of factories there. The Court also took note of the point of view which had generally been followed by the Punjab High Court as laid down in the case of Bhagat Ram v. Surjit Singh ILR(1957) Punjab 436. The property in that case was a shop situated in Bazar Sheikhan, Jallundur City. Apart from the fact that a shop which existed on the site had been burnt down in 1947 and rebuilt in 1948 there had been a change of circumstances in that formerely Bazar Sheikhan was a quarter used by women of ill repute and these women had disappeared from the area.

D. Falshaw CJ, in Sewa Ranis'' case (supra) observed that the word in similar circumstances'' must be strictly related to the conditions whcih obtained prior to the first of January, 1939 in the locality in question, and it is quite beyond the scope of the power of the Rent Controller to try imagine what the rent would have been to 1938 if the conditions prevelent 10 years ago had been inexistence at the time.

The question whether the phrase in similar circumstances occuring in lause (a) of Punjab Act governs only "similar accommodation" and not the word "same" was considered by the Supreme Court in Miran Devi Vs. Birbal Dass, . It was held that the phrase "in similar circumstances" occurring in clause (a) qualifies and governs both the expression, namely "the same" and "similar accommodation". It was observed that for arriving at the figure of basic rent the prevailing rate of rent in the locality for the same building has got to be determined. But such prevailing rate payable for the same building before the 1st, January, 1939, can form the basis of the fixation of the basis rent only when the same building was in existene in similar circumstances during that period. Identical will be the position with reference to the prevailing rate of rent for similar accommodation. The development of the locality would undobutedly be a change in the circumstances and it would be so if there has been an appreciable and substantial development of the premises or the building by alterations or new constructions after the 1st, January, 1939. A general increase in the size and prosperity of the town will not be sufficient to take the case out of the ambit of clause (a). It was observed that the intention of the Legislature is not to permit a landlord to charge fabulously increased existing rate as compared to the rate of rent prevailing before the 1st. January, 1939. merely because there has been a general prosperity of the town where the building is situated. If the building is a developed one, made so by substantial alterations, additions or new construtions then the fixation of fair rent u/s 4 of Punjab may have to be made on different considerations. But if there has been no development of the locality or the building since or after the 1st, January. 1939 then the prevailing rate of rent for the same or similar accommodation as was there before the 1st, January 1939, will have to be taken into account in fixing the fair rent.

Coming to the facts of this case. It has come on the record that the rentals of similar buildings in the locality are around Rs. 18,000/-. One A. G. Jagtap. Accounts officer, Jila Gramin Vikas Bank, has stated that for a building which was taken by the Bank, a rental of Rs. 900/- is being paid. This building was taken in 1983.. It consists of 9 big and 5 small rooms. No cross-examination was subjected to this witness. One D. R. Tripathi, who is Accounts Officer in the department of agriculture, has stated that a building adjacent to the present premises has been taken on rent for Rs. 1470/-. The building in the present case has bigger accommodation. Thus taking note of the accommodation whicch is available in the building the rental which was fixed at Rs. 400/,- was rightly set aside by the appellate authority. The assessment made by the appellate authority lakes notice of similar accommodation. It has rightly fixed the fair rent. This appeal is without any merit. It is dismissed with costs. Costs assessed at Rs. 500/-.