1. This is an application in revision arising out of proceedings for declaration of the standard rent of certain premises, and the facts are that the opponent company passed a rent note in favour of the petitioners who are the landlords on 18-3-1909, in respect of certain premises. The rent note granted a lease for 20 years in favour of the opponent company and the rent fixed under the rent note was Rs. 600. The rent note gave the option to the opponent company to renew the lease for a further period of 20 years on the same rent and the opponent company- availed itself of that option and the lease was renewed for a further period of 20 years.
In 1949 when the lease expired, the opponent company became a statutory tenant and was protected from eviction by the Rent Act. It appears that when subletting was permissible the opponent company sublet the premises. The position of the premises when the rent note was executed in 1909 was that they consisted of an open plot of land with nine sheds built on it and the opponent company built other structures besides the nine sheds on this open plot of land and these structures were let out to various sub-tenants, and the allegation of the petitioners was that the opponent company was recovering from its subtenants Rs. 1,458 as the rent and therefore the petitioners applied that the standard rent was not Rs. 600 but was much more than that and the Court should fix the standard rent. Both the Courts below have held that the standard rent is Rs. 600 and the landlords are not entitled to any increase.
2. Now, under Section 5 of the Rent Act 'standard rent' is defined--and I am quoting the material portion of the sub-section--as rent at which the premises were let on 1-9-1940. The view of the Courts below was that on 1-9-1940, when the premises were let by the petitioners to the opponent company the rent was Rs. 600 and therefore that was the standard rent. Mr. Tarkunde's contention is that the standard rent is not Rs. 600, but in order to fix the standard rent what should be taken into consideration is the rent that the occupying tenant were paying on 1-9-1940. Mr. Tarkunde says that the opponent company was not in occupation of the premises, that the sub-tenants were in occupation, they were paying a certain rent on 1-9-1940, and that is the rent which must be fixed as the standard rent.
It is also urged by Mr. Tarkunde that the scheme of the Rent Act is that there should be only one standard rent and the standard rent is in relation to premises and not in relation to what the tenant pays or the landlord receives, and it is urged that there could not be one standard rent as between the petitioners and the opponent company and another standard rent as between the opponent company and its subtenants. Therefore, to avoid this anomaly the proper way to determine the standard rent is to find out who is the actual tenant in occupation on 1-8-1940, to determine what rent he was paying on that day, and that rent would constitute the Standard rent.
It is further urged that the Rent Act was passed not in order to protect tenants who ceased to be tenants and became landlords, but to protect persons actually in occupation of premises, and therefore the tenant in this case who had to be protected was the sub-tenant and 'the rent that he paid must be determined for the purpose of fixing the standard rent and prevent that standard rent being Increased.
In my opinion it, is clear that the standard rent must be fixed as between the immediate landlord and the immediate tenant. In this case the petitioners as the landlords have made an application against their immediate tenant the opponent company, and the question that is to be decided is, what is the standard rent which the immediate tenant is liable to pay, and the immediate tenant is not liable to pay any higher standard rent than the rent he paid on 1-9-1940. There is no doubt as to what rent he was paying on 1-9-1940, and the law prevents the landlord from recovering any higher rent than that rent.
In my opinion it is also clear that in certain cases the standard rent which an immediate tenant pays to the landlord may be different from the standard rent which the sub-tenant pays to the tenant. Take this very case. In this case the premises which were let out by the petitioners to the opponent company are not the premises which had been sublet by the opponent company to its sub-tenants. Admittedly they have put up some structures. There is dispute as to the value of those structures, but it is not disputed that the tenancy has altered its character by the structures that have been put by the opponent company, and therefore it may be that if the question has to be considered as between the opponent company and its sub-tenants the standard rent payable by the sub-tenants may be different from the standard rent which the opponent company has got to pay to the petitioners. But if the case of the petitioners is that the opponent company is recovering more than what it is entitled to as standard rent from the sub-tenants, then the grievance is that of the sub-tenants and they can have that grievance redressed by proper proceedings. If, on the other hand, the petitioners' case is that the rent recovered by the opponent company is the standard rent, then the opponent company is doing what is permissible to it by law and the petitioners cannot say that they should be paid the same rent which the opponent company is recovering from its sub-tenants.
3. The scheme of the Act is made very clear if one looks to Section 13(1)(j) and Sub-section (4) of Section 13. Section 13(1)(j) provides that the landlord shall be entitled to recover possession if the Court is satisfied that the rent charged by the tenant for the premises or any part thereof which are sublet before the coming into operation of the Act is in excess of the standard rent and permitted increases in respect of such premises or part or that the tenant has received any fine, premium, other like sum or consideration in respect of such premises or part; and Sub-section (4) provides:
'For the purposes of Clause (j) of Sub-section (1) the standard rent or permitted increases in respect of the part sub-let shall be the amount bearing such proportion to the standard rent or permitted increases in respect of the premises as may be reasonable having regard to the extent of the part sub-let and other relevant considerations.'
Therefore, Sub-section (4) itself contemplates that the standard rent which the tenant is entitled to receive from his sub-tenant may be different, from the standard rent which the landlord may receive from the tenant. One of the relevant considerations contemplated by Sub-section (4) clearly is the fact that the tenant may improve the leased premises. He may put up structures and then sub-let the premises. In those cases clearly the tenant would be entitled to receive a higher rent from his subtenants than the rent he is paying to his own landlord. But Sub-section (1)(j) would only come into play when the tenant charges more than what he is permitted to do under the Act from his subtenant. But where you have a case where a property is let out by a landlord to his tenant and the tenant sublets it and the property has not changed its character, then under Sub-section (1)(j) the tenant would not be entitled to charge more than the rent which he pays to his own landlord, because in both the cases the standard rent would be the same. But that is not the case here, because, as I have already pointed out, the premises have altered their character. Therefore, it would not be correct to say, as Mr. Tarkunde has argued, that in every case the standard rent of the premises must be the same.
4. He has relied for this proposition on two English cases. The first is -- 'Glossop v. Ashley', 1922 1 KB 1. In that case the facts were entirely different . There on 3-8-1914, a brewery company were paying a rent to a public-house in the sum of 130 and the company sublet this house to the defendant on a rent of 24 a year. In August 1916 the lease to the company expired and the defendant became, the tenant of the public-house. The defendant's contention was that he was liable to pay the rent of 24 a year with certain permissible increases, whereas the case of the public-house was that it was entitled to recover 130 a year. The case of the public-house was that it was recovering 130 on 3-8-1914, which was the material date and therefore it was entitled to that amount. The contention of the defendant was that he was the tenant in occupation and he was paying only 24 and therefore that was the standard rent. On these facts the Court of Appeal in England held that the standard rent was 24 & not 130. Now, it is clear in this case that the dispute was between the landlord and his immediate tenant, and the question was, what rent was the immediate tenant liable to pay, and the Court held that the immediate tenant was liable to pay 24 because he was paying that rent on the material date, 3-8-1914.
Lord Justice Bankes at p. 7 points out that when occasion arises for ascertaining the standard rent, it may be assumed that the. Legislature had more regard to the rent, paid by the tenant than to the rent claimed by the landlord. Therefore, the test which the Court of Appeal laid down was that the standard rent was not what the landlord was receiving on 3-8-1914, but what the tenant was paying on that day. With regard, to the question of there being only one standard rent contemplated by law, Lord Justice Bankes at p. 6 refuses to decide that question saying that there were difficulties in the way of construing the Act as applicable to every case that arose before the Court. It is true that Lord Justice Scrutton is inclined to the view that the Legislature contemplated only one standard rent and he says that the object of the legislation was to protect the tenant in occupation and allow him to remain in possession as long as he pays the rent he was paying in August 1914. But all these observations are in relation to a case which arises between a landlord and his immediate tenant, and applying this test to the present case before me it is clear that the standard rent is to be determined by deciding what rent the immediate tenant was paying on 1-9-1940, and not by deciding what a subtenant was paying who is not the immediate tenant of the landlord.
5. The other case relied upon is -- 'Edgware Estates, Ltd. v. Coblentz', 1949 2 Alt ER 526, There also the facts were very different. A house was let out in 1926 on a lease of 21 years on a yearly rent of 300. There was a covenant against subletting. The premises were let in breach of the covenant at a rent of 225 per annum, in 1943 the breach of the covenant was waived and the sub-tenancy became lawful, and then the subtenant was recognised as the tenant. September 1, 1939, was the material date for the determination of the standard rent, and the Court held that in determining the standard rent the sub-tenancy should be ignored as till 1943 there was no legal sub-tenancy and therefore the standard rent was the rent that was reserved in the head-lease, viz. 300. At p. 529 Sir Raymond Evershed, Master of the Rolls, after considering the case in 'Glossop v. Ashley (A)', says:
'......as I read those passages the ratio in thatcase was that the sub-tenant was a person whom the Act was designed to protect, and, therefore, the rent he paid was to be regarded as the material rent for fixing the standard rent. Once, however, you arrive at the conclusion that the sub-tenant in occupation at the material date was not entitled to the protection of the Act the basis of the reasoning is destroyed.'
6. Now, in both these cases it must be borne in mind that the sub-tenant had become the tenant and he was claiming protection against his immediate landlord. It is under those circumstances that the Courts held that the sub-tenant was to be protected, and what was to be decided in order to determine the standard rent was the rent that the sub-tenant was paying on the material date. In the case of 'Glossop v. Ashley (A)' the sub-tenant was lawfully in occupation and herefore the rent that he paid was determined to be the standard rent, In the case of 'Edgware Estates Ltd. v. Coblentz (B)' the sub-tenant was not lawfully in occupation and therefore the rent that he paid was not taken into consideration in fixing the standard rent but the rent that the tenant was paying was considered to be the standard rent. In my opinion neither of these two cases help us to decide the question that arose on the facts of the case before me. In my opinion, therefore, the Courts below were right in the conclusion they came to.
7. The result is that the revision application fails. Rule discharged with costs.
8. Rule discharged.