V.S.KANODIA ETC.ETC. Vs A.L.MUTHU (D) THR. LRS.
Bench: G.S. SINGHVI,SUDHANSU JYOTI MUKHOPADHAYA
Case number: C.A. No.-005218-005222 / 2012
Diary number: 22595 / 2008
Advocates: T. MAHIPAL Vs
A. T. M. SAMPATH
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 521822 OF 2012 (ARISING OUT OF SLP(C) NO.2055020554 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 nonresidential
premises situated in Chennai, namely, (i) 2nd and
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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), Chennai18 (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), Chennai18
(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),
Chennai18
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 respondentlandlord 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
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value of the land was assessed @ Rs.25 lakhs per
ground. The appellanttenant 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, Chennai18, 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 respondentlandlord and appellanttenant
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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 appellanttenant
were dismissed by the impugned common judgment
dated 28.4. 2008.
6. Before the Courts below, the respondent
landlord took plea that the appellanttenant 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
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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 appellanttenant on appearance, denied
that the petition building is a Class I building and
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also denied the age of the building as mentioned by
the respondentlandlord. 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
ClassI building and the age of the petition building
being 16,17 and 45 years respectively, therefore, the
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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 respondentlandlord
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, Chennai18
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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
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‘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 appellanttenant, it was
brought to the notice of both the Rent Controller and
the Appellate Authority that another petition under
Section 4 was filed by respondentlandlord against
the appellanttenant 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
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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
appellanttenant 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
respondentlandlord, the Appellate Authority has
determined the market value of the land @ Rs.65 lakhs
per ground taking into consideration the
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classification report, Exhibit A9, Exhibit A4,
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.
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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 subsections:
(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 subsection (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
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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, twentyfive 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 subSections (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
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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
appellanttenants and the respondentlandlords 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 appellantstenants 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
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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, Chennai18) taking into
consideration the evidence on record including Exh.A
4, Exh.A9 and the market value of the adjacent land
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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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