REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 5218-22 OF 2012
(ARISING OUT OF SLP(C) NO.20550-20554 OF 2008)
V.S. KANODIA ETC. ETC. … APPELLANTS
VERSUS
A.L.MUTHU (D) THR. LRS. & ANR. … RESPONDENTS
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA,J.
1. Leave granted. These appeals have been preferred against a common
order dated 28th April, 2008 passed by High Court of Judicature at Madras
whereby Revision Petition Nos. 323, 324, 615, 616 and 3347 of 2007
preferred by appellant were dismissed.
2. The appellants are tenant whereas respondents are the landlord of
tenanted building. Initially, the dispute related to non-residential
premises situated in Chennai, namely, (i) 2nd and 3rd floors of the
building at D.No.23, TTK Road, (Mowbray’s Road), Chennai, (hereinafter
referred to as 1st property) (ii) 2nd floor of the front and rear
building at 22, TTK Road, (Mowbray’s Road), Chennai-18 (hereinafter
referred to as the 2nd property) and (iii) ground floor of the front and
rear and 1st floor rear of the building at 22, TTK Road, (Mowbray’s Road),
Chennai-18 (hereinafter referred to as the 3rd property) but in these
appeals, we are concerned with the rent fixed in respect to 2nd and 3rd
property situated at 22, TTK Road, (Mowbray’s Road), Chennai-18
3. In respect of 1st property at D.No.23, TTK Road, Chennai, the
contractual rent was Rs. 6210/- per month, which was increased to Rs.
18,847/- by an order passed by Small Causes Court, Chennai on 28.6.1996 in
RCOP NO.; 1046 of 1994 in a petition filed by respondent-landlord under
Section 4 of the Tamil Nadu Buildings Lease and Rent (Control) Act, 1960
(hereinafter referred to as the Act). In the said case, for determination
of fair rent, market value of the land was assessed @ Rs.25 lakhs per
ground. The appellant-tenant has preferred an appeal against the said
order in RCA No. 557/2004 and another appeal has been preferred by
respondent-landlord in RCA No. 1196/1996 before the Rent Control Appellate
Authority (Small Causes Court) Chennai.
4. In respect of 2nd and 3rd property situated at 22, TTK Road,
Chennai-18, the respondent-landlord filed two separate petitions under
Section 4 of the Act for fixing the monthly rent of respective portions,
registered as RCOP No. 1176 and 1177/1997. After hearing the parties,
those petitions were determined by Rent Controller by a common judgment and
decree dated 28.9.2004 whereby fair monthly rent of the properties were
fixed at Rs. 46,422/- and Rs.95,220/- respectively, after taking into
consideration the market value of land @ Rs.50 lakhs per ground.
5. Against the aforesaid common judgment, both the respondent-landlord
and appellant-tenant preferred appeals in RCA No. 1393, 1394, 1404 and
1405 of 2004. After taking into consideration the relevant evidence and
submission of parties, by a common order and judgment dated 14.10.2006
the appellate authority, (8th Judge) Small Causes Court, Chennai fixed the
monthly rent at Rs. 58,329/- and Rs. 1,21,877/- respectively, allowing the
appeal preferred by landlord and dismissing the appeals preferred by
tenant. The rent was fixed on the basis of valuation of land @ Rs.65 lakhs
per ground. Against the aforesaid order, the Revision petitions
preferred by appellant-tenant were dismissed by the impugned common
judgment dated 28.4. 2008.
6. Before the Courts below, the respondent-landlord took plea that the
appellant-tenant had been on the front portion of the ground floor for 43
years and in the rear side portion of the ground floor and also at the
rear side portion of the 1st floor and rear side portion of the 2nd
floor for the past 17 years and in the front portion for the past 16 years.
The petition building comes under Class I building with R.C.C. roofing
and all the three basic amenities are available. The plinth area of the
front portion of the ground floor is 1719 sq. ft., and the rear portion
is 1766 sq. ft. and the lumber portion is 341 sq. ft., latrine portion is
136 sq.ft., G.I. Sheet portion is 300 sq. ft. and on the 1st floor rear
side portion is 1766 sq. ft., Latrine portion is 121 sq. ft. and on the
2nd floor the front portion is 1800 sq. ft. and the rear portion is 1766
sq. ft. and that the plinth area of the latrine portion is 121 sq. ft..
Furthermore, the petition building is situated at a very important and
busy business area being Mylapore and, therefore, the value of the ground
site per ground will be Rs.75 lakhs. Hence, prayer was made to fix the
monthly fair rent of the petition building at Rs.77,706 and Rs.1,54,126
respectively.
7. The appellant-tenant on appearance, denied that the petition
building is a Class I building and also denied the age of the building as
mentioned by the respondent-landlord. According to them, age of the
petition building as per their engineer was more than 55 years; and the
measurement of basic amenities as shown in the petition were also
incorrect. They alleged that basic amenities were not available in the
petition building as was claimed by the landlord. The value of the ground
site mentioned in the petition was also disputed as excessive. According
to them, the petition building is situated in Bishop Wallers Avenue,
therefore, the value of the ground site cannot exceed Rs.10 lakh per
ground. Hence, it was submitted that the monthly fair calculated in the
petition was very excessive and, therefore, the petition under Section 4
of the Act be dismissed.
8. The Rent Controller as well as Appellate Authority after hearing the
parties decided the disputes relating to ‘Classification of building’,
‘Plinth area’, ‘Construction charges’, ‘Value of the ground site’ and
‘Basic amenities’. There is a concurrent findings that the petition
building is a Class-I building and the age of the petition building being
16,17 and 45 years respectively, therefore, the depreciation was calculated
at 1 per cent for 16, 17 and 45 years. The plinth area was accepted as
mentioned by the engineers on behalf of the landlord for the purpose of
determination of fair rent. Similarly, there is a concurrent findings
with regard to construction charges and basic amenities. The engineers of
both the parties had admitted that all three basic amenities were
available in the petition building and accordingly the engineers for the
landlord had fixed at 20 per cent and the engineers for the tenant had
allotted 10 per cent but the trial court and the Appellate Authority
accepted 15 per cent for determination of basic amenities.
9. So far as “value of the ground site” is concerned, parties
exhibited their respective evidence which were noticed by Rent Controller
and the Appellate Authority. The respondent-landlord produced the
evidence to claim the value of the ground site at more than 1 crore per
ground and in support of which a sale deed No. 99/88 dated 9.12.97
pertaining to door no. 241/1, T.T.K. Road Extention, Ambujammal Street,
Alwarpet, Chennai-18 was filed as Exhibit A4. It was also brought to the
notice of the Authority that an extent of 470 sq. ft. of land had been sold
for Rs. 14,00,000/- and on that basis the value per ground is Rs.71,48,936/-
and that the petition mentioned building is situated very near to
Radhakrishnan Road but the property pertaining to Exhibit A4 is situated at
a distance of 2 and ½ furlong from the petition mentioned building and,
therefore, in the classification report Exhibit A9, the ground site per
ground had been calculated at Rs.1 crore. The R.W.2, engineer on behalf of
the tenant in his Examination in Chief had mentioned that the ground site
where the petition mentioned building is situated is not owned by the
Petitioner as conveyed by the tenant and, therefore, for the calculation of
the monthly fair rent the value of the ground site had not been taken into
account, no sale document had been filed on behalf of the tenant. The
R.W.2, in his cross examination had mentioned that the petition mentioned
building is situated on the TTK Road and near the junction of Cathedral
Road and Radhakrishnan Road. There is a Church near the petition mentioned
building and ‘Woodland Hotel’ is situated at a distance of 1 and ½
furlongs from the petition mentioned building and opposite to it there is
a hotel known as ‘Mowbrays Inn’. Further, on the opposite site of the
‘Woodland Hotel’, St. Abbas School is situated. The Nilgiris Supermarket is
situated at a little distance from it and a Music Academy is also there
near the petition mentioned property. It was further mentioned that no
document had been perused for the valuation of the ground site. Hence, the
argument advanced that the petition mentioned building is situated on the
T.T.K. main road but the entrance pertaining to the tenant is through the
Biship lane was not accepted both by the Rent Controller and the Appellate
Authority.
10. On behalf of the appellant-tenant, it was brought to the notice of
both the Rent Controller and the Appellate Authority that another petition
under Section 4 was filed by respondent-landlord against the appellant-
tenant for fixation of monthly fair rent pertaining to 1st property
situated adjacent to the disputed 2nd and 3rd property. In the said case,
the rent has been fixed taking into consideration the valuation of rent @
Rs.25 lakhs per ground. Therefore, it was pleaded that same valuation
should be taken for determination of the present cases. The Appellate
Authority refused to notice the valuation as determined in respect of 1st
property with following observation:
“Since it had been admitted by both the parties that the appeal
filed against the aforesaid order is still pending and in such a
circumstance since it cannot be considered that the aforesaid
order had reached the final stage and, therefore, the trial
court having decided that it will not be justifiable to take
into account the aforesaid valuation seems to be correct and
decided accordingly.”
11. In this case, the main grievance of the appellant-tenant is that the
valuation of land as was determined in respect of 1st property @ Rs.25/-
lakhs per ground but same has not been taken into consideration for
determination of the fair rent of the petition building.
12. Per contra, according to learned counsel for the respondent-landlord,
the Appellate Authority has determined the market value of the land @ Rs.65
lakhs per ground taking into consideration the classification report,
Exhibit A-9, Exhibit A-4, etc., which are the recent market value and,
therefore, the High Court rightly refused to sit in appeal over a finding
of fact.
13. We have heard learned counsel for the parties and perused the record.
14. Section 4 of the Act reads as under:
“4. Fixation of Fair Rent. -
(1) The Controller shall on application made by the tenant or
the landlord of a building and after holding such enquiry as he
thinks fit, fix the fair rent for such building in accordance
with the principles set out in the following sub-sections:
(2) The fair rent for any residential building shall be nine
per cent gross return per annum on the total cost of such
building.
3) The fair rent for any non-residential building shall be
twelve per cent gross return per annum on the total cost of
such building.
4) The total cost referred to in sub-section (2) and sub-
Section (3) shall consist of the market value of the site in
which the building is constructed, the cost of construction
of the building and the cost of provision of anyone or more
of the amenities specified in schedule 1 as on the date of
application for fixation of fair rent.
Provided that while calculating the market value of the
site in which the building is constructed, the Controller
shall take into account only that portion of the site on
which the building is constructed and of a portion upto
fifty per cent, thereof of the vacant land, if any,
appurtenant to such building the excess portion of the
vacant land, being treated as amenity;
Provided further that the cost of provision of amenities
specified in Schedule 1 shall not exceed-
i) in the case of any residential building, fifteen per
cent; and
ii) in the case of any non-residential building, twenty-
five per cent,
of the cost of site in which the building is constructed and
the cost of construction of the building as determined under
this section.”
From the principles set out in sub-Sections (2) to (4) of Section 4
it is apparent that market value of the site on which the building is
constructed is an important factor to be taken into consideration for
fixing the fair rent of the building.
15. Reverting to the facts of this case, we find that the appellants are
tenant of three premises of which the respondents are the landlords. Out
of the three premises, the first premises is a non-residential building
constructed on land bearing D.No.23, T.T.K. Road, Chennai relating to
which fair rent has already been determined by the Rent Controller in RCOP
NO. 1046 of 1994. In the said case, the Rent Controller (Small Causes
Court), Chennai by judgment dated 28.6.1996 determined the market fair rent
on accepting the market value of the land at Rs.25 lakhs per ground.
Against the said judgment, appeals have been preferred by both the
appellant-tenants and the respondent-landlords but no order of stay has
been passed by the appellate authority; matter is still pending. With
regard to rest two rented premises, the building are situated on the
adjacent land bearing D.No. 22, TTK Road, Chennai which are the subject
matter of dispute. The mere fact that the appeal filed by appellants and
respondents remain pending for disposal for more than 8 years and during
the pendency the respondent-landlord filed two petitions under Section 4 of
the Act before the Rent Controller, cannot be made a ground to deprive the
appellants-tenants of their legitimate right to rely on a market value of
adjacent land (D.No. 23, TTK Road, Chennai) already determined by the Rent
Controller. Even if the appeals are dismissed by the appellate authority,
the market value of the adjacent land as determined will remain Rs. 25
lakhs per ground. In the cases in hand, it was not open to the appellate
authority to ignore the market value of the adjacent land already
determined on the ground of pendency of an appeal. The High Court failed
to appreciate the aforesaid fact though it was a fit case for the High
Court to interfere under Article 227 of the Constitution of India.
16. In the result, the appeals are allowed in part; the impugned
judgments of the Appellate Authority dated 14.10.2006 as affirmed by the
High Court, so far as it relates to “market value of the land” is
concerned, are set aside; Appeals, RCOP No. 1393, 1394, 1404 and 1405 of
2004 are remitted to the appellate authority (learned VIIIth Judge, Court
of ‘Small Causes Court’, Chennai) for determination of limited issue
relating to the market value of the land on which the building premises is
situated (D.No. 22, TTK Road, Chennai-18) taking into consideration the
evidence on record including Exh.A-4, Exh.A-9 and the market value of the
adjacent land as was determined by the Rent Controller in RCOP No. 1046 of
1994, etc., preferably within six months.
17. So far as the findings of the appellate authority with respect to
‘classification of building’, ‘depreciation’, ‘plinth area’, ‘construction
charges’ and of basic amenities of the petition building as affirmed by the
High Court are not interfered with by this Court and they are upheld.
There shall be no order as to costs.
……………………………………………….J.
( G.S. SINGHVI )
……………………………………………….J.
(SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
JULY 16, 2012.
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