Miss Liza
Arulanandam Vs. Smt. A.S. Sulochana [1990] INSC 274 (11 September 1990)
Ramaswamy,
K. Ramaswamy, K. Kania, M.H. Saikia, K.N. (J)
CITATION:
1990 AIR 2289 1990 SCR Supl. (1) 394 1990 SCC (4) 701 JT 1991 (5) 228 1990
SCALE (2)512
ACT:
Constitution
of India, 1950: Article 136--Special
leave--Findings of facts--Based on consideration of evidence Not to be
interfered with.
Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960:
Section
4--Fixation of fair rent--Cost of construction--Market value-Determination
of--As on which date.
HEAD NOTE:
The
appellant-tenant was in occupation of a double storeyed building on a monthly
rent of Rs. 170. The respond- ent-landlady filed an application under Section 4
of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 for fixation of
fair rent. The Rent Controller took note of the fact that 1/3rd portion of the
building was being used for residential purpose and the rest of the building
for non- residential purpose, namely, for running a school. He also appointed
an Engineer as Commissioner to evaluate the total cost of the building. The
Commissioner adopted the rates prevalent in the Public Works Department and
submitted his report. On the basis of the Commissioner's report, the Rent
Controller worked out the cost at Rs.1,51,820. Accordingly, the fair rent for
the said premises was arrived at Rs.1518 per month at 12 per cent gross return.
Since the respondent-landlady had confined her claim for the enhance- ment of
fair rent to Rs.1,O00 only, the Rent Controller fixed the fair rent at
Rs.1,O00. On appeal, the order of Rent Controller was affirmed by the Court of
Small Causes.
On a
revision being preferred, the High Court agreed with the valuation adopted and
determined the fair rent on the basis that 1/3rd of the premises was used for residen-
tial purpose and 2/3rd for nonresidential purpose, and, as per sub-sections (2)
and (3) of Section 4 of the Act, worked out the rent at 9 per cent and 12 per
cent respectively on the cost of construction arrived at. The High Court fixed
the fair rent at Rs. 1391.67 per month. It confirmed the fair rent of Rs. 1,000
as was fixed by the Rent Controller and as confined to by the Respondent
landlady.
This
appeal, by special leave, is against the High Court's order. It 395 was
contended that the cost of the building and its market value as worked out was
illegal, fallacious and untenable.
Dismissing
the appeal,
HELD:
1. Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
prescribes the principles on the basis of which the fair rent is to be fixed.
In the light of those principles, the evidence adduced by the parties was
considered by the Rent Controller, the appellate court and the High Court and
they found that the fixation of the fair rent was much in excess of the claim
made by the Respondent landlady. Since she confined her claim to Rs.1,O00 per
month, the courts below have fixed the fair rent at Rs.1,O00. Therefore, on the
findings of facts based on consideration of the evidence, this court cannot
interfere and come to its own conclusion. The finding is neither vitiated nor
illegal warranting interference. [210B-C]
2.1
Sub-section 4 of Section 4 of the Act, clearly indicates that the total cost of
construction referred to in sub-sections (2) and (3) shall consist of the
market value as on the date of application for fixation of the fair rent.
[209C]
2.2 It
is obvious that at the time when this Court rendered its decision in Nambiar's
case there was no provi- sion in Section 4 as to the date on which the cost of
con- struction was to be determined, and Rule 12 provided the manner in which
the fixation of the fair rent has to be made. The subsequent amendment brought
on the statute in 1973, by the Amending Act 23 of 1973, has incorporated sub-
section (4) in Section 4 which amplified the date of appli- cation as the
starting point to fix market value. As such the fair rent has been rightly
determined by the courts below. [209D-E; HI K.C. Nambiar v. The IV Judge of the
Court of Small Causes, Madras & Ors., [1970] 1 SCR 906, referred to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 2228 of 1982.
From
the Judgment and Order dated the 25.7.1980 of the Madras High Court in C.R.P.
No. 1150 of 1979.
Anant Palli
and E.C. Agarwala for the Appellant.
396 V.
Balachandran and K. Vijay Kumar for the Respondent.
The
Judgment of the Court was delivered by K. RAMASWAMY, J. The appellant/tenant is
in occupation of a double storeyed building bearing No. 100, Aiya Mudali Street, Chintadripet, Mount Road, Madras on a monthly rent of Rs. 170. The respondent landlady filed
an application under Sec. 4 of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 18 of 1960 as amended by Act, 23 of 1973, for short 'the Act'.
The Rent Controller fixed the fair rent at Rs. 1,000 per month. On appeal, the
Court of Small Causes, Madras and on further Revision under Sec.
25, the Madras High Court confirmed the order. This appeal by special leave has
been at the behest 01' the tenant. The admitted facts are that 1/3rd portion of
the building is being used for residential and the rest for non-residential
purpose namely, for running a school. It is of 50 years' old. Section 4 of the
Act provides the procedure for fixation of the fair rent, which reads thus:
"Fixation
of Fair Rent (1) The Controller shall on applica- tion 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 any one
or more of the amenities specified in Schedule I as on the date of application
for fixation of fair rent;
Provided
further that the cost of provision of amenities specified in Schedule I shall
not exceed-- 397 (i) in the case of any residential building, fifteen per-
cent; and (ii) in the case of non-residential building, twentyfive per cent, of
the cost of site in which the building is con- structed and the cost of
construction of the building as determined under this Section."
"5.(a) The cost of construction of the building including cost of internal
water-supply, sanitary and electrical installations shall be determined with
due regard to the rates adopted for the purpose of estimation by the Public
Works Department of the Government for the area concerned.
The
Controller may, in appropriate cases, allow or disallow an amount not exceeding
thirty per cent of construction having regard to the nature of the building.
(b)
The Controller shall deduct from the cost of construc- tion determined in the
manner specified in clause (a) depre- ciation, calculated at the rates
specified in Schedule II." A bird's eye view of Sec. 4 indicates that the
Control- ler shall hold an enquiry before fixing the fair rent pre- ceded by an
application made in that behalf either by the tenant or the landlord, in
accordance with the principles set out in sub-sections 2 to 5 of Sec. 4. In
case of a residential building the fair rent shall be 9 per cent and for
nonresidential building 12 per cent gross return per annum on the total cost of
the building in question. The total cost shall consist of (a) market value of
the site on which the building is constructed; (b) the cost of the construction
of the building; and (c) the cost of provision of any one or more of the
amenities specified in Schedule I which shall not exceed: (1) in the case of
residential building 15 per cent; and (2) in case of any non-residential
building 25 per cent of the cost of the site in which the building was
constructed as determined under Sec. 4 of the Act. The cost of the construction
of the building would also include internal water supply, sanitary and
electrical installations. The estimation of its ratio thereof shall be as is
done by the Public Works Department of the Government for the area concerned.
In addition to the above, having regard to the nature of the building, the
Controller may, in appropriate cases, allow or disallow an amount not exceeding
30% of construction. The Controller shall also deduct from the cost of
construction determined in the manner specified in clause (a) of sub- 398
section 5 of Sec. (4) the depreciation calculated at the rates specified in
Schedule II. The determination of the fair rent of the building shall be fixed
as on the date of the application filed for fixation of the fair rent.
Section
5 of the Act provides the right for refixation of the fair rent under the Act
for the reasons adumbrated therein with which we are presently not concerned.
An Engi- neer was appointed as a Commissioner to evaluate the total cost of the
building, who adopted the rates of the Public Works Department and submitted
his report which is Exhibit P-2. He was also examined as a witness. The rates
of the construction for terraced building were (a) for the ground floor at
Rs.345 per sq. metre and (b) for first floor at Rs.320 per sq. metre. As
regards the tiled portion, the cost of construction is Rs.300 per sq. metre.
The parties also adduced oral evidence. The Rent Controller after considera- tion
thereof fixed the rates as afore-stated and he worked out the fair rent on that
basis.
The
entire ground floor consists of 2927.25 sq. ft. the area of two shops wherein
consists of 238.00 sq. ft. The built up area of the first floor is 3330.75 sq.
ft., the tiled portion consists of 237 sq. ft. The cost of construc- tion was
estimated at Rs. 1,99,300. The depreciation @ 1 per cent, as is first class
building, was given. He added the market value of the open site at Rs.20,000
and also annuity on the vacant portion @ 1 per cent was added. Accordingly the
Rent Controller worked out the cost at Rs. 1,51,820. The fair rent as
non-residential premises, at 12 per cent gross return, was fixed at Rs. 15 18
per month. Since the respond- ent, landlady confined to the enhancement of the
fair rent at Rs. 1,000, it was accordingly fixed. On appeal it was affirmed. In
the revision, the High Court while agreeing with the valuation adopted,
determined fair rent on the basis that 1/3rd as being used for residential
purpose and 2/3rd for non-residential purpose. On that basis the learned Judge
worked out at the rate of 9 per cent and 12% as adum- brated in Sec. 4(2) and
(3) and fixed the fair rent. While upholding the depreciation at 1 per cent it
fixed the fair rent Rs.1391.67 per month, but affirmed the fair rent at Rs.1,O00
per month as was confined to, by the landlady. From this material matrix the
question at issue is whether the fixation of the fair rent by the Rent
Controller, ultimately affirmed by the High Court, is illegal. The contention
of the learned counsel for the appellant/tenant that the cost of the building
and its market value are illegal, is falla- cious and untenable. Section 4 not
only provides the proce- dure but also the principles and method on the basis
of which the fair rent is to be determined. The fixation of fair rent,
therefore, is in consonance with Section 4. We 399 accordingly affirm its
legality. Realising this stark reali- ty the counsel laid emphasis that the
valuation of the cost of construction should be as on the date of the
construction of the building and placed strong reliance on K.C. Nambiar v. The
IV Judge of the Court of Small Causes, Madras & Ors., [1970] 1 SCR 906. Therein this Court held that the expres- sion
'cost of construction' means the cost of construction of the building as
originally erected with such additions as may be required to be made for
subsequent improvements. Rule 12 which prescribes the rate at which the cost of
construc- tion is to be computed plainly goes beyond the terms of the section.
Accordingly this Court allowed the appeal and determined the fair rent as on
the basis of the cost of construction. On that premise the learned counsel for
the appellant contended that calculation of the cost of con- struction to the
residential as well as non-residential building should be with reference to the
date of applica- tion. We find no substance in the contention. It is already
seen that sub-section 4 of Sec. 4 of the Act, clearly indi- cates that the
total cost of construction referred to in sub-section 2 and sub-section 3 shall
consist of the market value as on the date of application for fixation of the
fair rent. It is obvious that at the time when this court ren- dered the
decision in Nambiar's case there was no provision in Sec. 4 as to the date on
which the cost of construction was to be determined, and Rule 12 provided in
the manner in which the fixation of the fair rent has to be made. But
subsequently it was amended by Amending Act 23 of 1973 incorporating in
sub-section (4) of Sec. 4 of the Act as the date of making an application. This
is also apparent when we see Sec. 5 of the Act. Sub-section (3) of Sec. 5
clearly mentions that:
"Where
the fair rent of any building has been fixed before the date of the
commencement of the Tamil Nadu Building (Lease and Rent Control) Amendment Act,
1973 the Landlord or the tenant may apply to the Controller to refix the fair
rent in accordance with the provisions of Section 4 and on such application,
the Controller may refix the fair rent. ' ' Thus we are clearly of the view
that the ratio in Nambi- ar's case no longer would apply. The subsequent
amendment brought on the statute in 1973, amplified the date of appli- cation
as the staring point to fix market value. On the basis of the valuation of the
building estimated by the commissioner as per P.W.D. rates prevailing in the
area and evidence produced by the parties, the Rent controller as modified by
the High Court rightly determined the fair rent.
400 It
is next contended that the method adopted by the Controller and ultimately
upheld by the High Court in fixing the fair rent is not correct. It is
contended that the value of the building has been changing from time to time as
is reflected from the evidence on record and the courts below committed the
gravest error in not considering the evidence in proper perspective. It is
already seen that Sec. 4 pre- scribed the principles on the basis of which the
fair rent is to be fixed. In the light of those principles the evi- dence
adduced by the parties was considered by the Control- ler, the appellate court
and the High Court, found that the fixation of the fair rent is much in excess
to the claim made by the landlady. Since the landlady confined the claim for Rs.
1,000 per month, the courts below have fixed the fair rent at Rs. 1,000.
Therefore, on the findings of facts based on consideration of the evidence,
this Court cannot interfere and come to its conclusion. Thereby the finding is not
vitiated nor illegal warranting interference.
The
appeal is accordingly dismissed with costs, fixed at Rs .5,000.
G.N.
Appeal dismissed.
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