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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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