National
Sample Survey Organization ANR Vs. Champa Properties Ltd. & ANR [2009] INSC
1171 (7 July 2009)
Judgment
Reportable
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.
4153 OF 2009 (ARISING OUT OF SLP(C) NO.1234 OF 2007) National Sample Survey
Organisation & Anr. ... APPELLANTS VERSUS
R.V.RAVEENDRAN,
J.
1.
Leave granted. Heard the learned counsel.
2.
The National Sample Survey Organization, the appellant herein was
the tenant under the first respondent (for short the 'respondent') in respect
of premises No.25A, Shakespeare Sarani, Calcutta, a building constructed in
1925 with a carpet area of 16157 sq. ft. The premises was taken on lease on
1.6.1972 on a monthly rent of Rs. 13,733/- (at the rate of Rs 0.85 per sq.
ft.). On a request by respondent for increase in rent, the appellant made a
reference to the Hiring Committee for reassessment on 1.4.1986.
Based on
its recommendation, the rent was increased to Rs.74,645/- per month (that is
Rs.4.62 per sq. ft.) with retrospective effect from 3.8.1983 2 and the increase
was communicated as per the appellant's letter dated 27.7.1988. The very next
day (28.7.1988), the respondent wrote to the appellant again requesting for
reassessment of the rent for the period commencing from 3.8.1988 (that is, from
the date of expiry of five years from the date of last increment) by referring
the matter to the Hiring Committee. Acting on the said request, the appellant
again made a request to the Hiring Committee, by letter dated 25.10.1988 for
re-assessment of rent.
3.
The Hiring Committee (consisting of three members - (i)
Superintending Engineer, Calcutta Central Circle No.II, CPWD, (ii) the Estate
Manager, and (iii) Surveyor of Works cum Executive Engineer, Calcutta Central
Division No.IV CPWD) by its proceedings dated 6.6.1989, reassessed and
recommended a rent of Rs.13.10 per sq.ft. of carpet area (inclusive of all
municipal taxes) with effect from 3.8.1988.
The
appellant found the increase suggested by the Hiring Committee was unreasonably
high and therefore initiated correspondence with the Hiring Committee for
reviewing the reassessment. When the matter was pending, the respondent, by
letter dated 27.6.1989, requested the appellant to fix the rent at Rs. 19/- per
sq.ft. plus municipal taxes.
4.
In the meanwhile, the respondent landlord entered into lease 3
agreements every year, with the appellant on 11.4.1989, 10.5.1990 and 29.4.1991
each for a duration of one year, on a monthly rent of Rs.74,645.34.
5.
As the premises was old and lacking in amenities and as the
respondent was not interested in carrying out repairs/improvements in view of
its intention to demolish and reconstruct the building, and as the appellant
was unwilling to pay a higher rent, the appellant, by its letter dated
16.3.1992, notified the respondent of its intention to vacate the premises. In
pursuance of it, the appellant vacated and delivered vacant possession of the
premises to the respondent on 25.6.1992. The respondent however went on
representing for revision of rent with effect from 3.8.1988. The appellant was
not agreeable for the rent recommended by the Hiring Committee, and wrote to
the Hiring Committee on 22.5.1992 and 5.11.1993 to review the reassessment of
rent, and furnished several documents in support of its request. The Hiring
Committee sent a reply dated 4.2.1994 stating that its recommendation in regard
to rent will not be reviewed.
6.
When matters stood thus, the respondent filed W.P. No.1675/1995 in
the Calcutta High Court for the following reliefs : (i) a direction to
respondents to reassess the rent from 3.8.1988 in accordance with the
guidelines contained in the Government order dated 13.6.1985 and 4 related
orders/circulars; and (ii) to give effect to the decision of the Hiring
Committee recommending Rs.13.10 per sq. ft. with effect from 3.8.1988 by way of
interim reassessment of rent subject to final assessment.
7.
In the said proceedings, by interim order dated 6.2.1998 and
24.2.1998, the High Court directed the appellant to pay Rs.5.08 (that is the
rent of Rs.4.62 plus 10% increase) for the period 3.8.1988 to 25.6.1992. The
appellant paid the rent accordingly. The writ petition was allowed by a Learned
Single Judge, by order dated 22.8.2002, directing the appellant to pay the rent
in regard to the period 3.8.1988 to 25.6.1992, to the respondent in accordance
with the recommendations of the Hiring Committee, within 6 weeks with interest
at the rate of 8.33% from 1998 till date of payment and in default to make
payment within 6 weeks, pay interest at 10% per annum. The learned Single Judge
was of the view that the matter was covered by a decision of the division bench
of that High Court in Regional Director (ER, AMD), Department of Atomic Energy
v. Rabindra Nath Nandi (A.P.O. No.243-244/1996 decided on 16.5.1997/18.9.1998)
and that the appellant was bound to pay increased rent as assessed by the
Hiring Committee.
8.
Feeling aggrieved, the appellant challenged the order of the
learned Single Judge in an appeal. By interim order dated 16.6.2003, the
division 5 bench stayed the operation of the order of the Learned Single Judge,
subject to appellant depositing 50% of the rent calculated at the rate of Rs.
13/10 per sq.ft. recommended by the Hiring Committee, with liberty to the
respondent to withdraw the same. The Division Bench disposed of the appeal by
order dated 31.8.2006 with the following directions, purporting to follow the
decision in Rabindra Nath Nandi (supra) :
(i) The
appellant should deposit the balance 50% of the arrears calculated at the rate
of Rs.13.10 per sq.ft. within two weeks.
(ii) As
the Hiring Committee had made available the details of calculations, the
appellant and respondent should offer their views on the assessment of rent by
Hiring Committee within four weeks.
(iii) The
Hiring Committee should reconsider the matter (in the light of the observations
of the High Court in Rabindra Nath Nandi) and take a final decision within
three months thereafter.
(iv) The
Hiring Committee should communicate its recommendations along with all
calculations in support of it, to both the parties.
(v) The
appellant should then take a decision on the said recommendations in the light
of the observations contained in Rabindra Nath Nandi within four weeks
thereafter. If the recommendation was not accepted, it should communicate the
reason for non-acceptance to the respondent within 48 hours thereof. If the recommendation
was accepted, all outstanding dues should be paid to respondent with interest
at 10% per annum, within four weeks.
(vi) The
Bank guarantee furnished by the respondent should continue till the controversy
was finally resolved. The respondent would be entitled to withdraw further 50%
of the amounts deposited by the appellant by furnishing a further bank
guarantee.
9.
The said order is challenged in this appeal by special leave. The
appellant contends that the writ petition was not maintainable, as the 6 lease
agreement contained an arbitration clause for settlement of disputes.
It also
contends that the landlord was entitled to increase in rent only in terms of
the provisions of the West Bengal Premises Tenancy Act, 1956 and not otherwise.
It is further contended that the reassessment by the Hiring Committee was only
a recommendation and as the increase recommended by the Hiring Committee was
arbitrary and excessive, it was not bound to accept the same. Lastly it is
pointed out that it had already vacated the premises on 25.6.1992 and the
tenancy till that date was regulated by lease agreements executed on 11.4.1989,
10.5.1990 and 29.4.1991 which stipulated a monthly rent of Rs.74,645/-, and
therefore it was not liable to pay any increased rent. On the contentions
urged, the following questions arise for our consideration :
(i)
Whether the writ petition by the respondent was not maintainable, in view of
clause 17 of the lease agreements dated 11.4.1989, 10.5.1990 and 29.4.1991
providing for settlement of disputes by arbitration ? (ii) Whether the
recommendation by the Hiring Committee was binding on the appellant and whether
the respondent- landlord could enforce payment of the rent recommended by the
Hiring Committee ? (iii)Whether the directions issued by the High Court in the
impugned order dated 31.8.2006 are warranted or justified ? Re : Question No.
(i) :
10.
The appellant submit that the parties had entered into three lease
7 agreements dated 11.4.1989, 10.5.1990 and 29.4.1991 in regard to the periods
1.4.1989 to 31.3.1990, 1.4.1990 to 31.3.1991 and 1.4.1991 to 31.3.1992 and all
the three agreements contained an arbitration clause (Clause No. 17) providing
that any dispute or difference arising between the parties, concerning the
subject matter of the lease agreements or any covenant, clause or thing
contained therein or otherwise arising out of the said leases, shall be
referred to an arbitrator to be appointed by the Government of India and the
decision of such arbitrator shall be conclusive and binding on the parties
hereto. Having regard to the said provision for arbitration, the appellant
contends that the remedy of the landlord-respondent, if it wanted any increase
in rent, was to seek reference to arbitration and the writ petition was misconceived
and not maintainable.
11.
A careful reading of the arbitration clause in the lease
agreements discloses that what is referable to arbitration, is any dispute or
difference concerning the subject matter of said three lease agreements or any
clauses thereof or any matter arising out of the said lease agreements.
But the
writ petition was not in respect of any of the said three lease agreements or
any term thereof. The grievance of the respondent put forth in the writ
petition is as under :
"On
28.7.1988, the respondent requested the appellant to refix the rent for a
period of five years with effect from 3.8.1988 by referring the matter to 8 the
Hiring Committee. The appellant accordingly referred the matter to the Hiring
Committee by letter dated 25.10.1988. The Hiring Committee after considering
the matter, recommended payment of rent of Rs.13.10 per sq. ft. of carpet area,
inclusive of all municipal taxes with effect from 3.8.1988. The appellant, a
department of Government of India, was bound by the said recommendation, having
regard to the terms of the Official Memoranda dated 19.7.1972, 1.9.1982,
9.5.1983, 22.8.1984 and 13.6.1985 of Government of India. But the appellant
failed to implement the said recommendation of the Hiring Committee. Nor did it
choose to itself reassess the rent from 3.8.1988 in terms of the O.M. Dated
13.6.1985, if it was not agreeable to accept the recommendation of the Hiring
Committee. Therefore the appellant should be directed to increase the rent from
3.8.1988 in terms of the O.M. dated 13.6.1985."
The
relief sought in the writ petition thus did not relate to, nor arise from the
contract of lease (the three lease agreements containing the arbitration
agreement) but allegedly arose out of the O.M. dated 13.6.1985 and related
official memoranda issued by the Government of India. The subject matter of
those official memoranda was not subject to any provision for arbitration. The
arbitration clauses in the lease agreements dated 11.4.1989, 10.5.1990 and
29.4.1991, therefore, did not cover or govern the issue raised in the writ
petition. Therefore the arbitration clause in the three lease agreements would
not come in the way of the writ petition being entertained. We are fortified in
our view by the decision in Titagarh Paper Mills Ltd. v. Orissa State Electricity
Board [1975 (2) SCC 436] wherein this Court held :
"...
when the Board decided to levy the coal surcharge on the consumers receiving
electricity from the Talcher-Hirakund grid, it claimed to do so under Sections
49 and 59 and the Sixth Schedule to the Supply Act. We must, therefore, first
examine whether any of these provisions of the Supply Act empowered the Board
to levy the coal surcharge. We fail to see how the machinery of arbitration 9
contained in clause (23) of the agreement can possibly cover such a question.
The arbitration agreement in that clause applies only to a dispute or
difference 'as to the supply of electrical energy hereunder or the pressure
thereof or as to the interpretation of this Agreement or the right of the
supplier or the consumer respectively to determine the same or any other
question, matter or thing arising hereunder.' The question as to whether the
Board had the power under Sections 49 and 59 and the Sixth Schedule to the
Supply Act to levy the coal surcharge is not a question, matter or thing
arising under the agreement. It is a claim founded on the provisions of the
Supply Act to impose the coal surcharge in addition to the rates payable by the
appellant to the Board under the agreement. Such a claim clearly falls outside
the ambit and coverage of the arbitration provision contained in clause (23) of
the agreement. The arbitration agreement cannot therefore, be regarded as a
relevant factor which should legitimately influence the discretion of the Court
in declining to entertain the writ petition on merits."
(emphasis
supplied) Re : Questions (ii) and (iii) :
12.
Neither the Single Judge nor the division bench of the High Court
examined the scope, purport and effect of the O.M. dated 13.6.1985 and other
related government orders. They merely relied upon the earlier judgment in
Rabindra Nath Nandi and held that the appellant was legally bound to increase
the rent from 3.8.1988 as per the recommendations of the Hiring Committee.
13.
It is necessary to refer to the background in which Hiring
Committees were constituted and the effect of the Official Memoranda relating
to assessment/reassessment of rent, before examining these questions.
Government was taking on rent several privately owned premises. The officers in
charge of the hiring departments of the 10 government were not experienced in
real estate matters and lacked the technical expertise in rent fixation. They
faced difficulties in verifying whether the rents demanded by the landlords
were reasonable or excessive. Many a time, owners of plots were also required
to construct buildings or make additions to existing rented premises, to meet
the specific requirements of the government departments. That also gave rise to
problems in assessing the reasonable rent. Sometimes, there was also collusion
between the building owners and the local officers of the government
departments, resulting in fixation of exorbitant rent for the premises, to the
detriment of public interest. Having thus felt the need to have expert advise, the
government constituted 'Hiring Committees' consisting of Engineers from Public
Works department, in various cities to advise the hiring government departments
proposing to take private buildings on rent. A somewhat similar difficulty was
also faced when it became necessary to increase the rent at the time of renewal
or extension of lease, as refusal to increase rents, after the expiry of the
lease period was likely to result in action for eviction. It was therefore
necessary to periodically re-assess the rent for purpose of revising the rent.
Where the contracts of lease did not provide for periodical increases, subject
to facts and circumstances of each case, it was thought fit to increase the
rent every five years, by consent of both parties. Here again, the expertise of
the Hiring Committee was required to assess the increase in rent, so as to 11
enable the lessee departments to negotiate with the landlords to arrive at an
agreed increase in rent.
14.
14.1) The
first circular regarding revision in rent was issued by the Government of India
on 19th July, 1972. It directed that rents once assessed cannot be enhanced
even by mutual agreement. But a request from the landlord for revision was to
be forwarded by the hiring department to the CPWD. The CPWD authorities were
required to decide whether the rent required an equitable revision, after
ascertaining whether any of the following circumstances existed :
(i)
Alternations/additions to the building having been carried out by the landlord,
thereby increasing its effective utilizable area;
(ii)Additional
facilities/amenities having been provided in the building (such as additional
fans, geysers, bath rooms, additional electric appliances etc.) by the
landlord, after the initial letting;
(iii)Increase
in the property/house tax by the local authorities;
(iv)Imposition
of new element of tax such as education cess by the State/Local authorities.
(v) The
rent control law applicable to the town/city concerned requiring increase in
rent.
14.2) The
subsequent OM dated 1st September, 1982 noted that the standard lease deeds
provided for the repairs to be carried out by the landlord and in default of
such repairs by the landlord, the government could execute the repairs and
recover the cost from the rent. It was also noted that the landlords were not
undertaking repairs or works of 12 maintenance, as they were not assured of
suitable enhancement in rent. A decision was therefore taken for allowing
periodical revision of rent payable for private buildings. It was decided that
the reasonableness of the rent may be got assessed from the CPWD on the expiry
of the period of five years (from the date of original assessment or the date
of the issue of the said OM dated 1.9.1982, whichever was later) and after
every five years thereafter. In making the reassessment, the CPWD was required
to take into the account the variation in the cost index during the relevant
period in addition to the factors mentioned in the O.M. dated 10.7.1972.
14.3) The
third OM dated 9th May 1983 provided that the reassessment was to be done
keeping in view, the variation in the cost of construction of the building
including land appurtenant thereto and the depreciation due to wear and tear
during the relevant period in addition to the factors mentioned in the O.M.
dated 10.7.1972.
14.4) The
fourth OM dated 22nd August, 1994 provided the following clarifications : (1)
No initiative for revision was to be taken by the government (tenant) and the
process of reassessment should be initiated only after a request from the owner
of the leased premises, the later of the dates between the date of receipt of
the request and the date on which the revision was due being adopted as the
date for revision of rent. (2) In all such cases or reassessment of reasonable
rent, a fresh lease agreement in 13 the form prescribed was to be entered into
with the concerned landlord.
(3)
Wherever Hiring Committees were functioning (such as in Bombay, Calcutta, Delhi
etc.), refixation of rent was to be done by such committees and intimated to
the concerned departments with details. (4) All the Ministries/Departments were
required to finalize the cases of reassessment of rents in consultation with
the concerned Hiring Committee.
14.5) The
last OM dated 13.6.1985 required the Hiring Committees to follow the guidelines
given below, while reassessing the rents :
"(i)
to work out the reproduction cost of the building as on the date of hiring
based on the ruling cost of building construction in the locality.
(ii) to
work out the depreciated value of the property assuming a straight-line
variation of depreciation depending on the age of the building.
(iii) to
work out the land area appurtenant to the building taking into account local
bye laws or in its absence with reference to the general practice in the
locality.
(iv) to
work out the cost of land on the basis of prevailing market rates for
comparable land in the locality and also the value of land appurtenant to the
building and the surplus land separately.
(v) to
add the cost of appurtenant land to the depreciated value of the building to
assess the reasonable return on the property.
(vi) to
add : (a) the actual Municipal taxes; (b) maintenance and repairs (12% of the
Gross returns) and (c) an appropriate provision in the form of a sinking fund
for recovery of capital after expiry of life of the building (with reference to
Sinking Fund Table).
The said
OM dated 13.6.1985 contained the following further 14 instructions:
"3.
In all cases, in addition to working out the rent on the principles of
valuation as enumerated above, the market rate of the rent prevalent in the
area should also be ascertained by the authority giving the rent reasonableness
certificate. Such inquiries may be made taking into account rent being paid for
properties taken on lease by other government or semi government organizations
like public sector undertakings, banks etc. for similar accommodation in the
locality. Officers of the CPWD should ascertain such figures of prevailing
market rents and collect authentic date preferably based on documents taking
into account the conditions included in the particular lease deed of those
premises from which the figure is taken and also keeping in view the relative
areas/size. The properties should be comparable in specifications and amenities
provided. They should make sure that the conditions of hiring are similar and
also ensure that the factors for which landlord is landlord like municipal
taxes, maintenance and repairs etc in the cases are similar.
4. After
assessing the two values for rent as enumerated above i.e.
rent
based on recognized principles of valuation and rent based on prevailing market
rates in the locality, the reasonable rent certificate should indicate both
figures in all cases where the prevailing market rent is more than the rent
calculated on the principles of valuation otherwise the lower figure only need
be indicated. The final decision regarding the actual rent to the paid to the
owner of the building will rest with the authorities desiring to hire the
property keeping in view the two figures of rent indicated in the certificate,
their own needs and availability of the accommodation in the locality at the
rent to be determined."
5.
Reassessment of rent of leased building will be treated as fresh case of rent
assessment and may be done according to the same principles as discussed in the
preceding paragraphs."
(emphasis
supplied)
15.
In Rabindra Nath Nandi, which was followed by the impugned
judgment, the Calcutta High Court after referring to the O.Ms. dated 19.7.1972,
1.9.1982, 9.5.1983, 22.8.1984 and 13.6.1985 concluded as under :
(a) The
five circulars (Official Memoranda) in effect provided for and 15 envisaged
revision of rent by consent. As the revision of rent could not be left to the
discretion of any individual officer and to lay down a uniform policy,
rationalized principles were laid down by the said circulars. The said
circulars regulated not only the grant of consent but also provided the method
by which the consent could be accorded by the government department.
(b) The
policy decision contained in the said circulars did not amount to contracting
out of the provisions of the West Bengal Premises Tenancy Act, 1956, as the
said Act recognized the right of parties to determine by consent reasonable
rate of rent payable in regard to any premises covered by the said Act.
(c) As
the circular dated 13.6.1985 and connected circulars were valid and binding on
the Hiring Department (Government) and the Hiring Committee had the
jurisdiction to assess and recommend the rent, the assessment by the Hiring
Committee were binding on the Hiring Department (tenant) if the assessment has
been made strictly in the manner prescribed in the circulars.
(d) The
Hiring Department cannot refuse to follow the recommendations of the Hiring
Committee except on the ground that it was not in accordance with the
circulars. If the recommendation by the Hiring Committee was not in accordance
with the circulars, the following procedure had to be followed:
(i) The
Hiring Committee must make available to the parties the details of all
calculations made with regard to the assessment of rents within four weeks from
date;
(ii)any
objections to such calculations by either party must be specific and made
within four weeks thereafter;
(iii)within
the same period any relevant evidence as to the market rate for the periods in
question with full particulars may be submitted by either party to the Hiring
Committee with copies to the other side;
(iv)the
Hiring Committee will then reconsider the matter in the light of the observations
in this judgment and take a decision on the materials before it after
verification within period of three months thereafter;
16 (v)
the recommendations alongwith all the calculations in support thereof will be
communicated to both parties within 48 hours thereof;
(vi) the
Department shall take a decision on the recommendation in the light of the
observations contained in the judgment within four weeks thereafter. If the
recommendation is not accepted, detailed reasons for such non-acceptance must
be recorded and communicated to the landlord within 48 hours thereof;
(vii)if
the recommendation is accepted, payments of all outstanding on account of such
reassessed rents must be made to the landlords within four weeks from the date
of the decision together with interest at the rate of 8 1/3% simple interest
per annum calculated from the date on which the payments were due upto the date
of payment.
The
decision is curiously silent as to what should happen if the Hiring Department
does not accept the recommendation of the Hiring Committee and gives the
reasons for such non-acceptance. Be that as it may.
16.
We are of the view that the elaborate decision in Rabindra Nath
Nandi missed the core issue and ignored the relevant law governing landlords
and tenants. A lease is governed by the terms of the contract (deed or
agreement of lease) between the parties. If the contract prescribes a rent for
the period of lease, the same being agreed rent, it is binding on the parties.
If the lease provides for revision of rents periodically, and specifies the
method and manner of revision, such revised rent would also be the agreed rent.
Where a statute governing tenancies and/or rents provides for fixation of rent
or increases in rent, 17 and such statute is applicable to the tenancy in
question, then the rent will have to be determined in accordance with the
statutory provisions.
Subject
to the above, any increase can be only by consent of parties. If the lease
period expires and the parties are not able to agree upon the increase in rent
or terms of renewal, it is open to the landlord to initiate action for evicting
the tenant. But under no circumstances can the landlord require the tenant to
pay during the period of a lease, a rent higher than what is agreed between them
or what is provided for in the statute. The assessment or determination of rent
by the Hiring Committee is an expert advice to the lessee and nothing more.
Except where there is an agreement to abide by the fixation of rent by the
Hiring Committee, neither party can insist or require the other party to abide
by the rent assessed by such Committee, as determination of rent by the Hiring
Committee is not statutory or contractually binding on the parties.
17.
If the parties (lessor and lessee) agree that an increase in rent
determined by the Hiring Committee will be binding on them, then of course, the
determination by the Hiring Committee will be binding upon the parties. The
lease deed/agreement between the parties itself may contain a clause that the rent
will be as determined by the Hiring Committee and the parties will be bound by
the same. It is of some relevance to note that in the year 1987, the respondent
proposed to demolish the existing building and construct a new building. The
18.
appellant and respondent entered into a memorandum of agreement
dated 28.9.1987 under which the respondent agreed to put up an additional
building in the vacant space, and the appellant agreed to temporarily shift to
the said building to enable the landlord to demolish the old building and
reconstruct the same and thereafter let out the reconstructed building to the
appellant. The said agreement specifically contemplated (Proviso to clause 31)
fixation of rent as assessed by the Hiring Committee. But the said proposal for
demolition and reconstruction did not materialise. Be that as it may.
19.
The fundamental requirement relating to consent, has been ignored
in Rabindra Nath Nandi. The said decision proceeds on the assumption that the
O.M. dated 13.6.1985 and other related circulars prescribed the procedure for
revision of rents every five years, and there was an implied consent on the
part of the government department to revise the rent as assessed by the Hiring
Committee and pay rent in terms of it. It also proceeds on the assumption that
whenever government takes a premises on lease, irrespective of the contract of
lease, the OM dated 13.6.1985 and related circulars would make it obligatory
for the government to revise the rent every five years. Both these assumptions
are baseless and arise from a misreading of the said OMs. The decision ignores
the specific provision in the OM dated 13.6.1985 that any assessment or
reassessment of rent by the Hiring Committee will be only 19 recommendatory and
not binding upon the Hiring Department, which takes the premises on lease from
the private landlord. The OM dated 13.6.1985 specifically states that the final
decision regarding the actual rent to be paid to the owner of the building will
rest with the authorities desiring to hire the property keeping in view the two
figures of rent indicated in the certificate, their own needs and availability
of the accommodation in the locality at the rent to be determined.
20.
As rightly observed in Rabindra Nath Nandi, the government was
aware of the fact that the Hiring Departments or their individual officers will
not have the expertise to assess the rent. Therefore, it devised a procedure
for assessment or reassessment of rent by an Expert Committee (Hiring
Committee) whose recommendation would help the Hiring department to take a
decision in regard to fixation of rent or revision of rent. But the mere fact
that a mechanism had been evolved to assess or reassess the rent by the Hiring
Committees or that a Hiring department had referred a demand for increase for
rent by the landlord, to the Hiring Committee for its
assessment/recommendation, does not mean that the assessment or reassessment of
rent by the Hiring Committee is binding upon the Hiring department or the
landlord. Nor will the assessment by the Hiring Committee, would create in the
private landlord or the tenant (government department), an enforceable right
with reference to the recommendation of rent made by the Hiring Committee,
against the other 20 party to the lease. The Hiring Committee is an expert
body, and a consultant to the lessee department. In considering the
recommendations of the Hiring Committee, the Hiring department is of course
expected to act reasonably and not arbitrarily. The Hiring department may also
usually abide by the advice of the Hiring Committee. But the Hiring department
is not bound by its recommendation. For several reasons, it may refuse to act
upon it. The following portion of the proceedings dated 6.6.1989 of the Hiring
Committee itself makes this clear :
"From
the directives contained in the office Memo dated 13.6.85, it will be observed
that the final decision regarding the actual rent to be paid to owner of the
premises will rest with the authorities intending to hire the property, keeping
in view the above two figures of rent, their own needs, and , no less, the
availability of accommodation in the locality at the rent to be
determined."
We are
therefore of the considered view that in the absence of an express contract
agreeing to be bound by the recommendation of rent by the Hiring Committee, its
recommendations are neither binding on the hiring departments nor on the
lessors. Rabindra Nath Nandi, to the extent it holds to the contrary, in our
considered view, is not good law.
21.
It is relevant to note that even the respondent proceeded on the
basis that the reassessment by the Hire Committee was only recommendatory and
was not binding. In its letter dated 27.6.1989 addressed to the appellant, the
respondent referred to the recommendation by the Hiring Committee in regard to
a rent of Rs.13.10 per sq. ft.
21
(inclusive of municipal taxes), but requested the appellant to fix the rent at
Rs.19 per sq. ft. exclusive of municipal taxes with effect from 3.8.1988. Even
in the writ petition filed by respondent, the contention of the respondent was
not that the rent of Rs.13.10 recommended by the Hiring Committee was only
provisional and its prayer was for increasing the rent in terms of the O.M.
dated 13.6.1985 for the period commencing from 3.8.1988.
22.
The appellant has categorically stated that it was not willing to
pay the higher rent suggested by the Hiring Committee. In fact, it made it
clear that it was not willing to pay higher rent as the landlord failed to
carryout repairs/maintenance and as it vacated the premises. There is therefore
no question of subjecting the question of rent to another round of
determination by the Hiring Committee. The respondent is not entitled to the
reliefs sought in the writ petition.
23.
We therefore allow this appeal, set aside the orders of the Single
Judge and Division Bench of the High Court and dismiss the writ petition.
The
respondent shall refund all amounts received in excess of the agreed rent, to
the appellant within three months.
.................................J. (R.V. RAVEENDRAN)
.................................J. (J M PANCHAL)
New Delhi,
July 7, 2009.
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