1. This is a petition under Article 227 of the Constitution challenging the order of the District Judge at Delhi dismissing the appeal of the petitioner Raj Krishan Jain against the order of the Rent Controller dated 19-7-1950 under Section 7A read with the fourth Schedule of the Delhi and Ajmer-Merwara Rent Control Act of 1947 fixing the standard rent of a house constructed by the petitioner on plot No. 11, No. 1 Darya Ganj, at Rs. 4537- and dividing the rent of the building among the eight tenants by fixing the rent for the four ground floor flats at Rs. 59/47- and for the four upper flats at Rs. 54/- per mensem.
2. It appears that the old bungalow known as No. 1, Darya Ganj had a large compound anda number of houses were built therein, one of them built on plot No. 11 being the premises in dispute. Two of the tenants of ground floor flats Hot Chand Hira Nand and Tulsi Das R. Sugand filed complaints with the Rent Controller In October and December, 1949 alleging that the rent paid by them for their flats was excessive. In each of these cases, the Rent Controller issued a notice to the landlord calling on him to submit all relevant records relating to the whole building. In January 1950 a third tenant Jaswant Rai Taneja submitted a similar application regarding which no specific notice appears to have been sent to the landlord. The record of the proceedings before the Rent Controller shows that three of the flats forming part of the house had been requisitioned fay the Government and there are some letters on the file which show that the local authorities were also anxious to have the standard rent fixed by the Rent Controller with regard to the requisitioned flats.
The record also shows that the landlord practically refused to co-operate with the Rent Controller in the enquiry or to assist in any way. In reply to the first notice sent regarding the petition of Hot Chand Hiranand a letter was sent by the landlord's son stating that his father was away from Delhi on a tour of pilgrimage and was expected back in the middle of December. The proceedings were accordingly adjourned, but again in January 1950 a letter was received saying that the landlord was away from Delhi and time was asked to be extended for the production of the evidence required by the Rent Controller to the middle of February. On the 7th of February the landlord wrote to the Rent Controller saying that he had not sufficient time to get a proper plan of the building prepared and an estimate of the cost worked out, and that time should be allowed till the end of March.
The case was then flxed for the 24th of March, but the landlord did not appear on that day and sent a medical certificate. Although some of the tenants protested, the Rent Controller adjourned the proceedings until the 18th of April. On that day a counsel appeared for the landlord and asked for an adjournment, but the Rent Controller said that he would discuss the matter at 3-30 p. m. in the presence of the tenants, and when the case was taken up at that time, nobody appeared for the landlord. From these facts, the Kent Controller came to the conclusion that the landlord was unwilling to assist him in the enquiry and after hearing the tenants and conducting an elaborate personal survey of the building, he made an estimate of its value together with the value of the land and flxed the rent on the basis of 74 per cent. return on the capital invested. It may, however, be mentioned that a sort of a written statement dated 10-6-1950 was submitted on behalf of the landlord.
3. The appeal of the landlord was dismissed by the learned District Judge Mr. S. S. Dulat, now a Judge of this Court, by his order dated 31-5-1951. In this order he has discussed and dealt with all the points raised on behalf of the landlord. The first point was that the Rent Controller had proceeded 'ex parts' without justification but the mere recital of the facts set out above shows how unfounded this plea was. In fact every latitude was shown before the Rent Controller proceeded to act independently. It may in any case be remarked that the personal presence of the landlord was not necessary at any stage, His own letters on the file of the Rent Controller which are on paper containing his printed letter-headshew that he describes himself as a merchant,banker, landlord and Municipal commissioner, and presumably he has employees and agents who look after his business and who must in fact have supervised the construction of the premises in dispute. There was nothing whatever to prevent the production by some agent of his of the relevant documents and accounts which would have shown the cost of the land and the cost of the construction of the building, but it is in fact quite apparent that these particulars were deliberately withheld.
This is not the first case of its kind which has come to my notice relating to this very area, Darya Ganj, in which landlords of many recently constructed buildings have been unwilling to assist the Rent Controller in coming to a proper conclusion by producing the best available evidence, and I am forced to the conclusion that this refusal is due to a considered policy. The landlords in fact seem to be on the horns of a dilemma. If they produce the proper date from which the value of the building can be correctly assessed, the excessive rents which they wish to charge cannot be allowed to them by the Rent Controller, while on the other hand, if they produce inflated accounts, magnifying the cost of their buildings with a view to increasing the standard rent above what it really ought to be, they find themselves in trouble with the income-tax authorities. In the circumstances, it must be held that the Rent Controller adopted the proper course, and indeed the only possible course, in carrying out a detailed Inspection of the building and forming his own estimate of the value of the land and the cost of construction.
4. It may in any case be stated that the learned District Judge himself inspected the premises at the request of the parties and came to the conclusion that the rents flxed by the Rent Controller for the various flats were, if anything, high. He found that the materials used in the construction of the building were quite ordinary, and not of superior quality and that the fiats were very small, consisting of two rooms measuring 13' x 10' and 10' x 10' a bathroom 3' x 3' and a small kitchen.
5. The point was also raised that the landlord had pleaded in his written statement dated the 10th of June which was apparently filed when the Rent Controller had practically concluded his enquiries that Section 7A and the fourth Schedule of the Act were not applicable to the premises as they had been constructed before the Act came into force in March 1947. Even then no attempt was made to produce any evidence before the Rent Controller in support of this contention, and I am rather inclined to agree with the learned District Judge that it was not very seriously put forward. In any case, it appears to be without foundation. One of the tenants has in fact produced a receipt for three years' rent paid by him in advance according to which he was to occupy the fiat in July 1948 although the construction was not quite finished.
6. The other points raised before and discussed by the learned District Judge have not now been raised before me, but some fresh points have been raised. The two main points are that since the landlord only received notice of the complaint of the first two tenants who applied to the Rent Controller, the latter had no right to determine the rent of all the eight flats in the building, and that in any case he had no right at all to determine the standard rent of the three flats which were shown as having beenrequisitioned by the Government even at the time when his order was passed.
7. As regards the first of these points, it is clear that although specific notice was only issued to the landlord regarding the complaints of Hot Chand Hiranand and Tulsi Das B. Sugand, a third tenant Jaswant Rai Taneja had filed a similar complaint in January 1950 and the landlord appears to have been aware of this as he later applied for a copy of Jaswant Rai's petition. Moreover, even after the institution of the first two tenants' complaints the landlord was in each case specifically called on to produce the relevant date regarding the whole of the building. The second clause of the fourth schedule reads :
'If the Bent Controller on a written complaint or otherwise has reason to believe that the rent of any newly constructed premises is excessive, he may after making such inquiry as he thinks fit, proceed to fix the standard rent thereof.'
The question arises what is meant exactly by the words 'or otherwise' in this clause. I find it hard to believe that this merely means on the oral complaint of some tenant and in my opinion the words clearly cover a case in which some tenants in a particular newly constructed building complain to the Rent Controller that their rent is excessive and he discovers that other tenants in the same building are also charged similar excessive rents for the premises occupied by them. It is obviously impossible for the Bent Controller to fix the standard rent of any portion of a newly constructed building without determining the value of the building as a whole, and then apportioning the standard rent thus calculated among the various parts of the building according to their size and amenities, and if he finds that the rent of the tenant of a particular flat is excessive it is obvious that the rents of tenants who are paying similar rents for identical premises are also excessive, and in my opinion his fixing the standard rent for the premises of these Other tenants must be held to be covered by the words 'or otherwise'.
There is nothing to stop a tenant from going on paying rent at the old rate to the landlord if he wishes to do so, but in my opinion there is nothing in the law to prevent the Bent Controller from fixing the standard rents of similar flats in the same building even where all the tenants have not complained.
8. The next point relates to the three upper floor flats numbered 4, 5 and 6 in the order of the Rent Controller which are simply described as requisitioned without the names of any tenants against them. There is no doubt that there is a special machinery for fixing the rent, which in this context is not called rent but 'compensation', to be paid by the Government for premises requisitioned under the Delhi Premises (Requisition and Eviction) Act XLIX of 1947. Section 7 of this Act deals with the matter and begins with the words :
'where any premises are requisitioned under this Act, the amount of compensation shall be determined in the manner and in accordance with the principles hereinafter set out.'
Briefly the method is either by agreement between the landlord and the Government, or, if there is no mutual agreement, by arbitration, an appeal lying to the District Judge against an arbitrator's award.
The use of the word 'shall' makes it quite clear that this section alone determines the methodby which the amount payable as compensation for requisitioned premises is to be arrived at. Inthe circumstances it is obvious that the letters from the Collector to the Rent Controller which are on the file of these proceedings asking him to fix the standard rent of the requisitioned premises should not have been -written, and the amount of compensation payable for these three flats could only be determined in accordance with the provisions of Section 7 of Act XLIX of 1947 and I am informed that proceedings are now pending under that section. At the same time it is clear that the finding of the Rent Controller regarding the standard rent for similar flats in the same building is relevant and may be taken into consideration by the arbitrator.
9. There is, however, another aspect of the case which arises out of this matter. The finding of the Rent Controller regarding standard rent of the three requisitioned flats may not be binding on the Government and the landlord as regards the amount of compensation during the period the flats are occupied by the persons for whom they have been requisitioned but the eight respondents in this case are the eight original tenants and two of them at least, are keenly interested in having the findings of the Rent Controller regarding the standard rent upheld. The order of the Rent Controller fixing the standard rent for newly constructed premises has been made retrospective under Clause 10(4) of Schedule 4 and these tenants who have been turned out of requisitioned flats and who had paid rent for long periods in advance are interested from the point of view of how much of the rent paid by them is recoverable from the landlord. One of the; tenants thus affected is the Bharat Bank Limited which had paid two years' rent in advance some time in 1948 and was actually turned out after the flat had been requisitioned in February 1949.
Durga Pershad Sonthalia respondent No. 4 entered into occupation of his flat in July 1948 having paid three years' rent in advance at a rent of Rs. 136/- per mensem and he was still in occupation when the order of the Rent Controller was passed and was only turned out in 1951. As this tenant was undoubtedly still in occupation in spite of the fact that a requisition order had been issued, I consider that the finding as regards standard rent in his case applies with full force. Even in the case of Bharat Bank the standard rent fixed by the Bent Controller still remains the standard rent, whatever compensation may be found to be payable during the period of requisition and it will obviously apply in future to any ordinary tenant who occupies the premises.
It therefore applies to the comparatively short period of occupation of the Bharat Bank, though whether the Bank will now be able to recover the amount paid in excess during this period of occupation will have to be decided in a separate suit. I understand that this Bank has already obtained a decree for the refund of the amount paid as rent for the period during which it could not occupy the flat, and the question whether a claim to recover the difference between the rent paid for the period of occupation and the standard rent now fixed will be within time will have to be decided by the Court in which such a claim is made.
10. One of the respondents Jaswant Rai Taneja did not oppose the present petition, having apparently left the premises and settled accounts with the landlord to their mutual satisfaction, but nevertheless even in the case of his flat the fixation of the standard rent will continue to holdgood. The result is that I dismiss the petition with costs and award costs to those respondents who appeared and contested the petition. Counsel's fee Rs. 30/- in each case.