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Harilal Shamalji Parekh Vs. JaIn Co-operative Housing Society - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberCivil Revn. Appln. Nos. 701 to 757 of 1953 and 293 of 1956
Judge
Reported inAIR1957Bom207; (1957)59BOMLR217; ILR1957Bom449
ActsBombay Rents, Hotel and Lodging House Rates Control Act, 1947 - Sections 11(1); Bombay Rent Restrictions Act, 1918
AppellantHarilal Shamalji Parekh
RespondentJaIn Co-operative Housing Society
Appellant AdvocateM.P. Laud, ;Y.V. Chandrachud and ;S.B. Gandhi, Advs., i/b., Panachand Shah and Co.
Respondent AdvocateJ.C. Bhat, ;Rajani Patel, ;Pherozsha H. Dalal and M.H.;Thakkar, Advs.
Excerpt:
.....to determine standard rent--whether court has jurisdiction to so determine where contractual rent not reasonable--what is 'excessive' rent.;under section 11(1)(a) of the bombay rents, hotel and lodging house rates control act, 1947, the intervention of the court in cases of letting after september 1, 1940, with contractual rent, can only be where the rent is not only not reasonable, but exceeds by some substantial margin what is reasonable, so that it may be termed to be excessive.;there is always a gap between what is reasonable and what is excessive, and what is excessive does not begin where what is reasonable necessarily ends. if the rent is within this gap between what is excessive and what is reasonable, the court has no jurisdiction to fix a just rent in such a case.;quaere:..........let after the 1-9-1940, and therefore, it is only if in the opinion of the court, the contractual rent is excessive that there would be jurisdiction in the court to fix what is a just standard rent: mr. laud contends that anything in excess of what is fair and reasonable, that is, in this particular case, anything in excess of rs. 520/-, is necessarily excessive; but in my opinion, that would be equating the word 'excessive' with not reasonable' whilst in point of fact it has, in its ordinary usage in the english language, a somewhat different meaning. there is always a gap between what is reasonable and what is excessive, and what is excessive does not begin where what is reasonable necessarily ends. if the rent is within this gap between what is excessive and what is reasonable, the.....
Judgment:

This is a group of 58 revision applications presented by the tenants of the Jain Cooperative Housing Society Ltd., in respect of an order dated the 22nd of April 1955 passed by the Appellate Bench of the Court of Small Causes at Bombay. The few facts that are material for the determination of these applications are these. The petitioners as tenants had applied for fixation of the standard rent alleging that the contractual rent was excessive. It appears that the buildings were ready somewhere in 1949 and were occupied thereafter by the tenants. The land on which these buildings were constructed was the subject matter of negotiations for a lease between persons who subsequently became members of the Society and the Bombay Municipality. In 1942 the Society was registered and the negotiations were continued on behalf of the Society and in 1943 the Municipality accepted the offer made on behalf of the Society to grant a lease on the basis of Rs. 9/- per square yard of the entire land. However, before the lease could be obtained, the Plot was occupied by the military and it continued to be so occupied till some time in 1947. It was only on the 1st 08 September 1947 that possession was given by the Municipality to the Society and it is thereafter that the Society started building construction.

2. Now it appears that an Appellate Bench of the Court of Small Causes at Bombay, has, in a prior judgment in what is known as Talati's case, laid down a rule for determining what is a fair and reasonable rent; and the rule is that the rent shall be equivalent to 6 per cent, on the valuation of land and 8.2/3 per cent, on the valuation of building. It is the practice of the Small Cause Court to refer the question of determination of what is a fair and reasonable rent to an architect, and when he has made his report, objections may be filed by either party before a Judge of the Court of Small Causes and there may in appropriate cases be an appeal to the Appellate Bench against the decision of the single Judge, in this particular case, the matter was referred to Mr. Divecha, architect: and the main grievance made in these applications is that Mr. Divecha valued the land, not at the price which was paid by the Society for it namely, Rs. 9/- per square yard, but at the value of the land when the building was erected on it and that value was held to be Rs. 35/-. What is canvassed on these petitions is the very interesting and undoubtedly very important question of law as to whether, in determining what is a fair and reasonable rent and for the purpose of that determination what is the valuation of the land on which a certain percentage may fairly be allowed as Part of the rent to be arrived at, the value to be taken is the value actually paid by the land-lord whenever he purchased that land, irrespective of the date of the building, or whether it is the value of such land at the time when the building was in fact put up or ready for occupation. It is the case of the applicants before me that, since what is contemplated by the provisions of the Rent Act is to secure to the landlord a fair and reasonable return, the Court ought to concern itself merely with what he has invested, whenever lie may have invested it. To this the answer of the Opponents is that, if there has been an appreciation in the value of land between the date on which the landlord purchased it and the date when he utilised it for the purpose of putting up the building, the landlord is entitled to the benefit Of such appreciation and not the tenants ; for it is argued that, if perchance the landlord had purchased the property during a boom period and at the date on which the building was put up the prices had crashed, the tenants would legitimately have claimed that the only investment of the land-lord that should be considered for the purpose of determining a fair and reasonable rent is, not what he said during' the boom period, but what the !and would have cost him at the time the building was put up. Or take again the case where a landlord may for some sentimental reason pay an excessive price for a plot of land. No tenant could be saddled with a reasonable return on such excessive price if it had been paid for reasons other than the intrinsic value of the land. These interesting questions would have had to be debated and determined provided their decision was going to make any difference to the actual amount of standard rente that were fixed in the cases of these 58 applicants. But assuming that the petitioners' contention is wholly right and that Mr. Divecha should not have taken into account the value of land as on the date when the buildings were put up, but should have taken the actual value that the landlord paid, Mr. Divecha in his report sums up his conclusion-as follows :8, 2/3% on cost of buildings

Rs. 13,36, 728/- Rs. 1,07,183/-6% on the value of the landRs. 3,74,815/- Rs. 22,489/-Rent of 18 buildings. Rs. 1,29,672/- p. a.This is the rent of 18 buildings, which works out at Rs. 600/- per month per building. If instead of the value of land Rs. 3,74,815/-. the value that the landlord actually paid was substituted, it being Rs. 9/- per square yard for 9,232 square yards less a small discount that was paid by the Municipality for payment in advance, the figure works out at roughly Rs. 80,000/- for the value of land, and 6 per cent, on this value would be Rs. 4,800/-. With this figure substituted for Rs. 22,489/-, the resultant rent per month per building works out approximately to Rs. 520/-. The contractual rent o each building is Rs. 560/- only.

3. Now, the power of the Court to fix the standard rent Is derived from Section 11 of Bombay Rent Act. 1947. Sub-section (1) thereof enumerates the cases in which the standard rent may be fixed by a Court, having regard to the provisions of the Act and the circumstances of the case, at such a figure as the Court deems just; and the first of such case is: 'Where any premises are first let after the first day of September 1940, and the rent at which they are so let is in the opinion of the Court excessive'. This is a case in which the premises were first let after the 1-9-1940, and therefore, it is only if in the opinion of the Court, the contractual rent is excessive that there would be jurisdiction in the Court to fix what is a just standard rent: Mr. Laud contends that anything in excess of what is fair and reasonable, that is, in this particular case, anything in excess of Rs. 520/-, is necessarily excessive; but in my opinion, that would be equating the word 'excessive' with not reasonable' whilst in point of fact it has, in its ordinary usage in the English language, a somewhat different meaning. There is always a gap between what is reasonable and what is excessive, and what is excessive does not begin where what is reasonable necessarily ends. If the rent is within this gap between what is excessive and what is reasonable, the Court, in my opinion, has no jurisdiction to fix a just rent in such a case. Turning to Murray's Dictionary, the meaning given to the word 'excessive' that appears to me pertinent in the context of this provision is: 'immoderate, inordinate, extravagant'. It must be remembered that, since the Bombay Rent Restrictions Act. 1918, the scheme of the Rent Restrictions Acts in Bombay had been that, in respect of property let after a particular date set out in the various Acts, the standard rent was the rent at which they were first let, with no jurisdiction in the Courts to consider whether that rent was or was not reasonable. This was altered for the first time in the Act of 1947 when Section 11 Sub-section (1), Sub-clause (a) was enacted and the object thereof was not, and could not have been that the Court had jurisdiction in every case where the rent was not reasonable to determine what it should be because if it was, nothing could have been easier than for the Legislature to provide that, where in the opinion of the Court rent is not reasonable, it may proceed to determine the standard rent. But the phraseology used is: 'where in the opinion of the Court the rent is excessive'; and, therefore, the intervention of the Court in cases of letting after the 1-9-1940 with contractual rent can only be where the rent is not only not reasonable, but exceeds by some substantial margin what is reasonable so that it may be termed to be excessive. I do not wish to lay down any arbitrary arithmetical rule to determine what is excessive in this context, because the Court has to form its own opinion as to what is excessive under the provisional of the section itself, 'and that decision should not be fettered by any artificial rule; but I have no doubt in my mind that, in the context of this litigation and particularly having regard to the fact, that between the date on which the terms of the; lease had been finalised in 1943 and the date when the buildings were put up there had been an appreciable increase in the values of land, which, whether it is to be taken into account directly or not is a relevant circumstance that must be kept in view, an increase of Rs. 40/- in a sum of Rs. 520/- which is worked out as a fair and reasonable rent on the basis, which Mr. Laud has canvassed before me on behalf of the petitioners is (sic not?) excessive: I am therefore, not disposed, in the exercise of my revisional jurisdiction, to interfere with the decision of ah appellate Bench of the Small Cause Court which has upheld the contractual rent and refused to proceed to determine what is the standard rent which would be just under Section 11. In my opinion, it is not necessary for the purposes of this petition to determine the interesting question of law that has been raised and which must await decision in a matter which may directly raise it for decision.

4. The result, therefore, is that all these applications fail and they are dismissed and the rulesdischarged. In the peculiar circumstances of thiscase. I direct that there shall be no order as tocosts.

5. Revisions dismissed.


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