Chunilal Vithaldas Vs. Mohanlal
Motilal Patel  INSC 104 (15 April 1965)
15/04/1965 SHAH, J.C.
CITATION: 1967 AIR 226 1966 SCR 180
Saurashtra Rent Control Act 22 of 1951, s.
28-Section providing for second appeal against judgment of first appellate
court under the Act-Such second appeal whether restricted by s. 100 of Code of
The respondent was the owner of a building
used as a cinematograph theatre. By a registered deed dated December 23, 1960,
the appellant obtained a lease of the theatre at a monthly rental of Rs.
1801/-. He then applied under s. 11 of the Saurashtra Rent Control Act 22 of
1951 for an order fixing the standard rent of the theatre. The Court of First
Instance taxed the standard rent of the whole theatre at Rs.
1030/12/-. Against this order the respondent
filed an appeal under s. 28(1) of the Act to the District Court.
That court fixed the rental at Rs. 1150/-.
Against the order of the District Court second appeal under s. 28(2) of the Act
was preferred by the appellant to the High court.
It was dismissed under 0.41, r. 11(1); of the
Code of Civil Procedure. Aggrieved, the appellant came to this Court. It was
contended, inter alia, that (i) a second appeal under s. 28 of the Act was not
governed by s. 100 of the Code of Civil Procedure, (ii) that in calculating the
cost of the building the courts below erred in taking into consideration the
whole price paid by the respondent for the land as well as the buildings
standing on it at the time of purchase, and that (iii) the District Court erred
in taking 7% as an adequate return in respect of the property in question.
HELD: (i) The second appeal under s. 28 of
the Act may be entertained by the High Court within the limits provided by s.
100 of the Code of Civil Procedure, and it is not open to the parties to demand
reappraisal of the evidence by the High Court on the ground that the District
Court had erred in its view of the evidence. The High Court was competent to
dismiss the appeal under 0.41, r, 11(1) of the Code. [184 G] The expression
'second appeal' in the Code means an appeal to the High Court from the decision
in a civil suit or proceeding of a first appellate court subordinate to the
High Court. [183 F] The disputes directed to be dealt with under the Act are
essentially disputes of a civil nature and the courts invested with the power
under s. 27 of the Act have to adjudicate upon the disputed rights in the light
of its special provisions. The procedure in the trial of suits, applications
and proceedings under the Act is the procedure prescribed by the Code of Civil
Procedure except when it is otherwise provided expressly or by clear
implication. [183 G] It is true that the proceedings under s. 11 do not result
in 2 decree and that certain orders under the Act are made appealable under s.
28 though such orders are not appealable under the Code. But the right of
appeal On that account is not released from the restrictions which are
attracted by its very nature. [184 A-B, F-G] 181 Doshibai Khanna v. Sandhi
Suleman Gulmamad, 6 Guj.L.R. 342 and Nagardas Harichand v. Modi Mohanlal, S.A.
No. 381 of 1960 dt. 21-9-1964, disapproved.
Union of India v. Mohindra Supply Co. 
3 S.C.R. 497, distinguished.
(ii) The courts below did not commit any
error in taking into consideration the whole price paid by the respondent for
the land and building purchased by him. A building when let out forms a
composite unit with the land on which it stands and the rent received from the
building cannot be wholly attributed to the building. [185 F-G] (iii) On a
review of the reasons given it could not be said that the District Court
committed any error of principle in coming to the conclusion that 7% gross
return on the cost of construction should be regarded as an adequate return
from the property in question. [186 G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 427 of 1964.
Appeal by special leave from the judgment and
order dated August 28, 1959 of the Bombay High Court in Civil Application No.
1638 of 1959.
Bishan Narain, J. P. Mehta, S. N. Prasad, J.
B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.
R. M. Hazarnavis, K. L. Hathi, Atiqur Rehman,
for the respondent.
The Judgment of the Court was delivered by
Shah, J. Respondent in this appeal is the owner of a building used as a
cinematograph theatre. By a registered deed dated December 23, 1960, the
appellant obtained a lease of the theatre at a monthly rental of Rs. 1,801/-.
The appellant applied under s. 11 of the Saurashtra Rent Control Act 22 of 1951
hereinafter called 'the Act'-for an order fixing the standard rent of the
theatre. He submitted that the rent stipulated to be paid under the lease was
"excessive, exorbitant and improper" and that the standard rent of
the theatre, having regard to its situation and size and the amenities provided
therein, could not exceed Rs. 350/per mensem. The respondent by his
written-statement submitted that the rent stipulated under the lease was
The Court of First Instance fixed the
standard rent of the whole theatre at Rs. 1,030/12/being the one-twelfth of the
gross return of 6% on the cost of construction of the theatre and the cost of
furniture installed therein. But the learned Judge held that the respondent had
not delivered to the appellant possession of the basement and of a part of the
building which was intended to be used for a restaurant, and on that account
reduced the standard rent payable by the appellant by Rs. 220/182 Against the
order of the Civil Judge, the respondent preferred an appeal under S. 28(1) of
the Act to the District Court, Gohilwad, and the appellant preferred cross objections
to the order appealed from. The District Court agreed with the Trial Court that
the cost of construction of the building and cost of the furniture was Rs.
2,06,150/-, and held that standard rent should be fixed on the basis of a
return of 7 % of the cost of the building and furniture, and on that footing
computed the standard rent at Rs. 1,200/per mensem. The District Court further
held that possession of the space reserved for a restaurant was delivered to
the appellant and since about June 1952 it was in the appellant's occupation.
It was however common ground between the parties that possession of the cellar
was not delivered by the respondent to the appellant. It was the case of the
respondent that the cellar was not included in the premises let out. It was the
case of the appellant that it was so included. On the view that the cellar was
not included in the tenancy, the District Court directed that standard rent of
the premises in the occupation of the appellant be fixed at Rs. 1,150/per
Against the order of the District Court,
second appeal No. 552 of 1959 preferred by the appellant to the High Court of
Judicature at Bombay was by order dated March 30, 1959 dismissed under 0. 4 1,
r. 11 (1) of the Code of Civil Procedure. The respondent also preferred an
appeal to the High Court. For reasons which we are unable to ascertain this appeal
was not made ready for hearing before the Bombay High Court, and on
reorganisation of the State of Bombay that appeal was transferred to the High
Court of Gujarat and we were informed at the Bar that the appeal is now pending
before that High Court.
Against the order of the Bombay High Court
dismissing his appeal, the appellant has appealed to this Court.
It is somewhat unfortunate that the appeal
filed by the respondent has been admitted to the file and is to be heard on the
merits, while the appeal filed by the appellant was summarily dismissed.
Counsel for the appellant submitted that we should set aside the order of the
High Court of Bombay, since a second ap. peal under S. 28 of the Act Jay to the
High Court on a question of fact as well as of law, and as there was
"voluminous evidence" on the record which had to be considered in
determining the appropriate standard rent, the High Court of Bombay committed a
grave error in summarily dismissing the appeal. We are unable to agree with that
Section 28(1) of the Act provides:
"Notwithstanding anything contained in
any law, but subject to the provisions of the Provincial Small Cause Court Act,
as adapted and applied to the State of 183 Saurashtra, an appeal shall lie from
a decree or order made by a Civil Judge or a Munsiff exercising jurisdiction
under section 27 to the District Court and a second appeal to the High
Court." It was said that the expression "second appeal" in s.
28(1) of the Act means an appeal from an appellate decree, but restrictions
imposed by s. 100 of the Code of Civil Procedure upon the power of the High
Court are not attracted to a "second appeal" under s 28 of the Act.
Ordinarily, says counsel for the appellant, an appellate Court is competent to
examine the correctness of the decision appealed from on the ground that the
decision is erroneous in point of law or fact, and in the absence of any
express provision to the contrary, restrictions imposed on the power of the
High Court under one statute cannot be imported merely because of similarity of
nomenclature, when exercising jurisdiction under another statute unless those
restrictions are imposed by express enactment or necessary intendment. It was
said that the State of Saurashtra has not imposed restrictions upon the power
of the High Court in dealing with a second appeal under s. 28 of the Act, and
the High Court was competent and was indeed bound to entertain all objections
to the correctness of the judgment appealed from.
It is true that in the body of s. 100 of the Code
of Civil Procedure the Legislature has not used the expression "second
appeal". That expression however occurs in the marginal note of s. 100 and
in the text of ss. 101, 102 & 103. Section 101 is enacted to make explicit
what is clearly implied in s. 100 Code of Civil Procedure: s. 102 prohibits
second appeals from decrees in certain classes of suits; and s. 103 confers
power upon the High Court to determine questions of fact in certain conditions.
It is clear therefore that the expression "second appeal" in the Code
means an appeal to a High Court from the decision in a civil suit or proceeding
of a first appellate Court subordinate to the High Court.
Section 27 of the Act does not confer any
special jurisdiction upon the courts described therein, for the Act creates no
new rights; it only seeks to regulate the rights and obligations of landlords
and tenants in respect of certain classes of tenancies in urban areas. The
disputes directed to be dealt with under the Act are essentially disputes of a
civil nature: and the courts invested with Power under s. 27 of the Act have to
adjudicate upon the disputed right in the light of the special provisions and
not by the Transfer of Property Act and the Contract Act.
The Act has again merely declared that a second
appeal will lie to the High Court against decrees or orders passed by the
courts exercising jurisdiction under s. 27, but thereby the essential character
of a second appeal under the Code is not altered. The procedure in the trial of
suit, 184 applications and proceedings under the Act is the procedure
prescribed by the Code of Civil Procedure, except where it is other.
wise-provided expressly or by clear implication.
It is true that certain orders contemplated
to be made under the Act determining rights and obligations of the parties are
made appealable under s. 28, though such orders are not appealable under the
Code, but that is not a ground for holding that the Legislature intended to
confer upon litigants a right of second appeal unhampered by the restrictions
imposed by s. 100 of the Code.
In Doshibai Khanna v. Sandhi Suleman
Gulmamad(1) a single Judge of the Gujarat High Court, following an unreported
judgment of that Court in Nagardas Harichand v. Modi Mohanlal(1) observed that
in a second appeal under the Act correctness of the decision of the District
Court on questions of fact was liable to be canvassed in the High Court. For
reasons already mentioned, we are unable to agree 'With the view that in a
second appeal under s. 28 of the Act, questions which may not be raised in an
appeal under s. 100 of the Code of Civil Procedure may be raised.
It is true that in Union of India v. Mohindra
Supply Company(1) this Court held that by providing in s. 39(2) of the Arbitration
Act, 1940, that "no second appeal shall lie from an order passed in appeal
under this section", it was intended to prohibit an appeal under the
But the Court reached that conclusion because
of the scheme of the Arbitration Act. The Legislature having prohibited a
second appeal under the Arbitration Act, obviously the limits of the power
which the Court could. exercise if such an appeal were entertained could not
fall to be determined in that case.
Section 11 of the Act does not contemplate
that the decision of the Court determining standard rent shall be incorporated
into a decree of the Court, and by S. 28 of the Act a second appeal lies to the
High Court against an order determining standard rent. The orders which
determine on the merits, rights and obligations of the parties arising out of
the relation of landlord and tenant, may have serious consequences, and the
Legislature has conferred a right of appeal to the party aggrieved by those
orders. But the right of appeal on that account is not released from the
restriction which are attracted by its very nature. We are of the view that a
second appeal under s. 28 of the Act may be entertained by the, High Court
within the limits prescribed by s. 100 of the Code of Civil Procedure, and it
is not open to the parties to demand reappraisal of the evidence by the High
Court on the ground that the District Court has erred in its view of the
evidence. The High Court of Bombay was apparently of the view that no question
of law arose in the appeal, and it was competent to dismiss the appeal under 0.
4 1, r. 1 1 (1) of the Code.
(1) 6 Guj. L.R. 342.
(2) S.A. No. 381 of 1960 decided on Septr.
(3)  3 S.C.R. 397.
185 It was then urged that the judgment of
the Distt. Court proceeded upon misconception of the evidence on the record,
and on that account a second appeal would lie within the limits prescribed by
s. 100 of the Code of Civil Procedure.
It was said that in computing the cost of
construction, the appellate Court had taken into consideration several items of
expenditure which may not properly enter into the cost of construction.
According to the books of account of the respondent the total cost incurred by
the respondent was Rs.
2,11,790/5/-. This amount included the cost
of transport, miscellaneous items, pan Biding, distribution of sweets, and Puja
totaling Rs. 8,855/15/3. The trial Judge was of the view that certain
miscellaneous items were not allowable in the computation of the total cost of
the building and he held that an amount of Rs. 5,640/5/should be disallowed and
with that view the appellate Court agreed. We do not think that the Courts
below committed any error of law or misconceived the evidence in holding that
only Rs. 5,640/5/be disallowed out of the total cost of construction on the
ground that they could not reasonably enter the computation.
It was then said that the Courts below
committed an error in taking into consideration the whole price paid by the
respondent for the land and building purchased by him. The appellant had
purchased for Rs. 30,701 /an area of land together with houses thereon and had
demolished the houses and had erected the theatre in respect of which this
dispute has arisen. The houses had, it appears, been let out and rent was being
received by the owner. It was urged. by the appellant that the rent should be
capitalised and the value of the land determined by deducting from the price
paid by the respondent such capitalised value of the structure. But that would
be a wholly faulty method of valuation. Rent received from a structure, is
determined not merely by the nature of the structure and the accommodation
provided thereby, but also by the situation and the amenities provided by the
land on which the structure stands. A building when let out forms a composite
unit with the land on which it stands, and the rent received from the building
cannot be wholly attributed to the building. The respondent purchased the
property with a view to pull down the houses thereon and to put up a building
adapted for use as a cineniatograph theatre. It is true that some rent was
recovered from the tenants before the structures were pulled down. But since
the respondent purchased the land and the buildings for putting up a new
building thereon, he may reasonably be regarded as having paid for the property
purchased the value of the land and of the debris of the superstructures. The
debris which by sale fetched Rs. 9,171/3/has been given credit for in arriving
at the total cost of the theatre.
It is also worthy of note that one Masataram,
a consulting architect, estimated the cost of the structure to be Rs. 2,35,777/1/2
186 at the rates prevailing in 1950. He stated that the prices prevailing in
1954 when he gave evidence were a little lower than the prices prevailing in
1950, "though in respect of certain items the prices may have gone
up". The Trial Court and the District Court regarded his evidence as
reliable, but having regard to the fact that in constructing the theatre the
respondent had used some second-hand material, the Courts below held that the
cost of the structure was truly shown by the accounts of the respondent, and
that conclusion must be accepted.
It is then urged that ordinarily in towns
like Bombay, Ahmadabad and Poona standard rent is determined as equivalent to
one twelfth of the gross return on the sum invested by the landlord at the rate
of 8.66 % on the cost of the building, and at the rate of 6 % on the value of
the land, and since the cross rate includes municipal taxes which vary between
25% to 33-33% of the letting value standard rent is considered as reasonable if
it fetches to the landlord 4-1/2% per annum on the value of the land and 5-1/2
% on the cost of building. It is true that in the city of Bhavnagar no
municipal taxes and rates were, at the material time, charged by the
Municipality, and therefore some adjustment would have to be made in
ascertaining the percentage of gross return on the investment in determining
standard rent. It is common ground that charges for water supply arc made by
the Municipality. There is however no evidence on the record to show as to what
the rates for water supplied by the Municipality were. It was faintly suggested
by counsel for the appellant that the water charges are payable by the tenant,
but there is nothing to support that contention. The appellate Court has, on a
consideration of the evidence, come to the conclusion that an overall rate of 7
% on the investment for the building and land may be regarded in the town of
Bhavnagar as an adequate return to the landlord. What rate of return in respect
of the landed property may be regarded as reasonable in determining the
standard rent under s. II of the Act depends upon certain vs. friable factors.
Normal expected yield from immovable property in the locality, return from
alternative investments, municipal and other charges, the use to which the
property is to be put, its condition, repairs it needs to keep it in tenantable
condition and a host of other related circumstances must enter into the
determination. On a review of the reasons given, it cannot be said that the
District Court committed any error of principle in coming to the conclusion
that 7% gross return on the cost of construction should be regarded as an
adequate return from the property in the town of Bhavnagar which is utilised
for a cinematograph theatre.
Two other questions remain to be considered.
Even though it was not pleaded in the petition filed by the appellant that
possession of a part of the building let out was not delivered, the appellant
was permitted, without objection, to raise that question at 187 the trial. It
was the case of the appellant that possession of the cellar and the space
reserved for a restaurant were not delivered to him, and on that account
appropriate deduction should be made from the standard rent. The respondent
conceded that possession of the cellar was not given to the appellant, but his
case was that he did not deliver the cellar because it was not included in the
premises demised in favour of the appellant. Unfortunately the lease has not
been printed in the paper book and the parties have not chosen to produce for
our perusal a copy of the lease. We have not thought it necessary to hold up
the proceeding in this Court in view of the ultimate order we propose to make
in this appeal. The trial Court was of the view that having regard to the
carpet area of the cellar Rs. 100/per mensem should be deducted from the
standard rent of the entire building. The District Court without giving any
reasons observed that fair standard rent for the cellar would be Rs. 501per mensem.
In our view the Court was not right in reducing the proportionate rent of the
cellar from Rs. 100/to Rs. 501-. The question whether the cellar was let out to
the appellant under the terms of the lease will be determined by the High Court
of Gujarat before which the appeal filed by the respondent is pending. We have
for the purpose of this appeal held, agreeing with the Distt. Court, that the
standard rent of the entire building is Rs. 1,200/per mensem. If the cellar is
not included in the tenancy, Rs. 100/will have to be deducted and the standard
rent will be Rs. 1,100/per mensem.
The other matter in dispute relates to the
space intended to be used for a restaurant. The respondent contended that
possession of that room was delivered to the appellant: the appellant denied
that it was so delivered. It is common ground that it was part of the premises
leased. Enquiry into the question whether by reason of default on the part of
the landlord in delivering possession of a part of the premises let out under
the lease any loss was occasioned to the tenant and to what relief the tenant
is entitled on that account is foreign to the determination of standard rent.
We therefore decline to enter into the
question whether possession of the space intended for use as restaurant was
delivered by the respondent to the appellant. The decision of the Courts below
on that part of the case is vacated.
We accordingly modify the order passed by the
District Court and declare that the standard rent of the whole building
including the space for the restaurant and the cellar is Rs. 1,200/per mensem.
We further declare that if the cellar is not included in the tenancy, standard
rent of the premises let out will be Rs. 1,100/per mensem. The appellant has
substantially failed in this appeal. He will pay 7/8th of cost of the
respondent in this appeal.
Appeal dismissed and decree modified.