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Central Bank of India Vs. Govind Narain - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtRajasthan High Court
Decided On
Case NumberCivil Appeal Nos. 7, 8, 19 and 20 of 1961
Judge
Reported inAIR1971Raj306; 1970(3)WLN758
ActsTransfer of Property Act, 1882 - Sections 107; Registration Act, 1908 - Sections 17 and 49; Rajasthan Premises (Control of Rent and Eviction) Act, 1950 - Sections 6 and 8
AppellantCentral Bank of India
RespondentGovind Narain
Appellant Advocate B.N. Chanda, Adv.
Respondent Advocate R.L. Maheshwari, Adv.
Cases Referred and Smt. Radhey Piari v. S. Kalyan Singh
Excerpt:
transfer of property act - section 106--rent deed not registered--whether it can be used to prove on oral agreement of lease.;even if the rent deed is not registered and is inoperative still it can be used for proving oral agreement of the lease and the tenancy that is created by legal implication would only be a monthly tenancy under section 106 of the transfer of property act. we have noticed the various cases and have no hesitation in coming to the conclusion that the defendant-tenant became a monthly tenant of the owner of property.;(b) rajasthan premises (control of rent & eviction) act, 1950 - section 6--standard rent--premises occupied in march 1944 at monthly rent of rs. 150/---whether standard rent be determined at 2½ times i.e. rs. 375/-.;the parties agreed that the.....chhangani, j. 1. these four appeals arise out of two suits between the same parties, the earlier being a suit for mere arrears of rent and the later being a suit for arrears of rent and ejectment in respect of the same premises and are connected with each other and deserve to be disposed of by one judgment.2. the material facts may be stated as follows :--in the city of jodhpur outside the jalorigate there is a building known by the name of 'tapariya mansion'. it belonged to shri jai narayan tapariya and his family. in march 1944 a portion of this building was let out by deceased jai narayan to jodhpur commercial bank (hereinafter referred to as the 'bank') at a monthly rent of rs 150/- per month for a period of five years ending on 31st march, 1949. although the initial period of the.....
Judgment:

Chhangani, J.

1. These four appeals arise out of two suits between the same parties, the earlier being a suit for mere arrears of rent and the later being a suit for arrears of rent and ejectment in respect of the same premises and are connected with each other and deserve to be disposed of by one judgment.

2. The material facts may be stated as follows :--

In the city of Jodhpur outside the Jalorigate there is a building known by the name of 'Tapariya Mansion'. It belonged to Shri Jai Narayan Tapariya and his family. In March 1944 a portion of this building was let out by deceased Jai Narayan to Jodhpur Commercial Bank (hereinafter referred to as the 'Bank') at a monthly rent of Rs 150/- per month for a period of five years ending on 31st March, 1949. Although the initial period of the lease expired on 31st March, 1949, the Bank continued to remain in possession of the premises. Negotiations were commenced between Jai Narayan Tapariya and the authorities of the Bank for the terms of the lease after 31st March, 1949. There was a protracted correspondence and eventually, on 28th October, 1949. Jai Narayan had a meeting with the Chairman and the General Manager of the Bank at Bombay. During that meeting the terms relating to continuance of the lease were discussed and an oral agreement was reached. The main terms agreed were subsequently incorporated in a letter No. 5/F-10-52-731 dated 29-10-1949 addressed by Manager, Bombay Branch, to Jai Narayan Tapariya. They may be reproduced here:--

'(1) Rent to be fixed at Rs. 500/-(Rupees Five Hundred only) per month from 1st April, 1949.

(2) An agreement for ten years with an option to the Bank for further five years on the same terms of rent.

(3) Fixing of steel shutters for the doors and the staircase for the cellar to be carried out when the amount of Rs. 9,000/- is accumulated with us by crediting sundry deposit rent account at the rate of Rs. 500/- per month, being the monthly rent of our premises.

(4) You will bear half of the costs which we shall have to pay to our solicitors in respect of the lease agreement.'

3. It may also be mentioned that after the despatch of this letter the Jodhpur Branch of the Bank opened a sundry deposit rent account and credited Rs. 500/- per month in that rent account on account of the rent of the premises. Credit entries were also made in this account in respect of the amount payable by the Bank to the landlord on account of electricity and water charges. It may be mentioned at this stage that Jainarayan and his son Laxminarayan had mortgaged the entire building Tapariya Mansion with Udaibhan and Devchand and others to secure certain loan. The mortgagees having not secured the repayment of the loan, filed a suit on the basis of the mortgage deed. In that suit, Badridass, the present plaintiff, was appointed as a receiver of the property. The plaintiff, Badridass made some efforts to secure the recovery of the rent and electricity and water charges from the Bank, but having not succeeded, filed a suit (No. 36 of 1954) on 1-6-1954. In this suit he prayed for a decree for a sum of Rs. 33,385/-. The particulars of this amount are as follows:--

1. Arrears of rent for 62 monthsfrom 1-4-1949 to 31st May, 1954,Rs. 31,000/- were calculated atRs. 500/- per month; the plaintiff gave a credit of Rs. 450/- on account of the rent for threemonths received at the rate ofRs. 150/- per month and a creditof Rs. 1,000/- cash received from the Bank. The amount on account of rent was thus reduced to ... Rs. 29,550/-2. Water charges ... Rs. 81/-3. Electricity charges ... Rs. 1,446/-4. Interest ... Rs. 2.308/----------------Rs. 33,385/-

4. This suit was contested by the defendant-Bank. The defendant-Bank admitted having taken the lease of the premises in the year 1944 at a monthly rent of Rs. 150/- per month. It was' also admitted that there were some negotiations for the creation of a fresh lease after 31st March, 1949. The Bank, however, did not admit that an oral agreement was reached between Jai Narayan and the General Manager of the Bank. It also did not accept that Ex. 1 was sent by the Manager of the Bank at Bombay. It was also pleaded that even if Ex. 1 was held proved, it could not bring about the relationship of landlord and tenant between - the parties as it was not written on a proper stamp paper and was not registered. A plea was also taken that the agreement to pay Rs. 500/- per month was void as it was an agreement to pay rent in excess of the standard rent of the premises. Various other pleas were also taken, but we are not concerned with them in these appeals.

5. While the suit was going on, on 3-6-1967 the plaintiff filed yet another suit in which besides claiming the arrears of' rent a prayer for ejectment of the Bank from the suit premises was also made. In this suit, the plaintiff prayed for a decree for the amount of Rs. 18.211/13/- as follows:

(i)

Rent for 36 months from 1-6-1954 to 31-5-1957.

Rs. 18,000/-

(ii)

Electricity charges

.

Rs.139/2/-

(iii)

Water charges

.

Rs.72-1-

(iv)

Notice expenses

.

Rs._-/11/-

.

Rs.18,211/137-

6. The trial court framed a number of issues in both the suits. Although the suits were initially tried separately, but they were consolidated at a later stage. They were, however, disposed of on the same date, i.e., on 24-9-60, though by two separate judgments. The trial court held that Ex. 1 was issued by Shri C. H. Diwanji as Manager of the Bank at Bombay and that it bears the initials of Shri N.L. Daga, Chief Accountant of the Bank at Bombay, who subsequently was promoted as Manager in one of the branches of the Bank. The eventual conclusion arrived at by the trial court was that the Bank had agreed to raise the rent from Rs. 150/- to Rs. 500/- The trial court also held that Chhiti Ex. 1 dated 29-10-1949 was executed by the defendant No. 1 and that it was accepted by Jai Narayan. Issues Nos. 1 and 2 were thus decided in favour of the plaintiff.

7. Dealing with the question of admissibility of letter Ex. 1 in the absence of its having been not written on a stamp paper and having not been registered, the trial judge referred the case of Ram Kumar Das v. Jagdish Chandra Deo Dhabal Deb, AIR 1952 SC 23 and held that valid and subsisting arrangement had come into existence between Jainarayan and the defendant-Bank and that the Bank agreed to become month to month tenant @ Rs. 500/- per month of the plaintiff. The trial judge considering the validity of the agreement between the parties fixing the rent at Rs. 500/- per month, observed that the basic rent was Rs. 150/- per month and that the standard rent should not have exceeded 21/2 times of the basic rent and, therefore, the maximum standard rent could not exceed Rs. 375/- per month. The trial judge accordingly fixed standard rent at Rs. 375/- per month. The trial court consequently held that the agreement to pay Rs. 500/- as rent was void having regard to the provisions of Section 8(2) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 (hereinafter referred to as the Act). The trial court, however, found that the plaintiff-landlord had invested substantial amounts in carrying out improvements over the building. These improvements included the construction of a lavatory, collapsible doors and the fixing of shutters to the staircase. The cost of these improvements was assessed by the trial judge at Rs. 8,157/3/3. On the basis of these improvements the trial judge held that the plaintiff was entitled to a further addition of Rs. 56/- to the monthly standard rent of Rs. 375/-. It was thus held that the plaintiff was entitled to charge rent @ Rs. 431/- per month. On these findings the trial judge calculated the amount of rent for 62 months from 1-4-1949 to 31-5-1954 at Rs. 26,722/- and the light and the water charges were assessed at Rs. 1,527/- the total amount thus found due was Rs. 28,249/-. Out of this the trial court gave a credit to the defendant for Rs. 1,527/- on account of prior payment of light and water charges and for Rs, 7,157/3/- on account of expenditure incurred by the Bank on improvements and Rs. 1,450/-paid previously. The total of the amounts credited come to Rs. 10,134/3/3. The principal amount thus found due and decreed by the trial court was Rs. 18.114/12/9. The trial court further allowed interest up to the . date of the suit @ Rs. 41/2 per cent and fixed the amount at Rs. 810/-. The trial court accordingly decreed the plaintiff's suit for an amount of 18,924/12/9. The trial court further allowed future interest on the decretal amount from the date of the suit till final satisfaction (@ Rs. 6 per cent per annum.

8. In the second suit the trial court found that the plaintiff was entitled to Rs. 15,416/- on account of rent for three years and Rs. 211/13/- on account of light and water charges.. The total amount thus decreed was Rupees 15,627/13/-. It was further directed, by the trial court that the decretal amount will carry future interest @ 6 per cent per annum from the date of the suit till final satisfaction. A decree for ejectment was also passed. The trial court also granted a decree for future rent from 1-6-1957 till actual eviction at Rs. 431/- per month, but this decree was, however, subject to the payment of the additional court-fee according to law.

9. Aggrieved by this decree the plaintiff landlord and the defendant-Bank filed these appeals. During the pendency of the appeals, the Jodhpur Commercial Bank was amalgamated with the Central Bank of India and after nationalisation the successor Bank is now known as Central Bank of India, The necessary corrections in the title of the four appeals were made with the consent of both the parties.

10. The plaintiff landlord claimed that a decree for the agreed rent of Rs. 500/- per month should have been awarded. He further claimed additional amounts on account of interest, costs and compensatory costs. In the appeal against the decree in the earlier suit that is appeal No. 19 of 1961, he has prayed for an additional decree of Rs. 6,701/- consisting of Rs. 4,278/- on account of difference of rent between the agreed rent and the rent allowed; Rs. 927/10/- on account of difference between interest claimed and the interest allowed; Rs. 869/6/- on account of costs not allowed and Rs. 625/- on account of compensatory costs under Section 35-A not allowed. In appeal No. 20 of 1961 arising out of second suit he has claimed Rs. 5,474/- on account of difference between the rent claimed and rent allowed for the period of 1-6-1957 to 10-1-1961. In the second appeal, he has also sought a clarification about the interest; his contention being that he has been allowed interest on the amount of arrears of rent accruing during the period of pendency of the litigation also.

11. The defendant-Bank in its appeals contends that the suit should have been decreed at the rate of Rs. 150/- per month and that the plaintiffs' claim on account of interest and for pendente lite arrears of rent should not have been decreed. It was also contended that the amount added to the standard rent on account of improvements carried out in the leased premises was wrongly calculated and that it should have been Rs. 51/- only instead of Rs. 56/- and that this additional amount should have been allowed from the month of May 1953 when the improvement was actually completed.

12. We have heard the counsel for the parties and consider that the proper way to deal with these appeals will be to formulate the various controversies on the submissions made at the Bar and to adjudicate upon those controversies. An attempt to give separate findings on the appeals will involve unnecessary repetition of facts, arguments and findings.

13. Incidentally, we may point out that Mr. Maheshwari did not join any controversy with regard to the proof of Ex. 1.

14. Having regard to the arguments made before us the main questions arising for our determination may be formulated as follows:--

(1) Whether Ex. 1 is not binding on the Bank, it having not been executed by the Chief Agent of the Jodhpur. Branch, who alone, according to the defendant, was competent to execute a rent deed?

(2) Whether Ex. 1 can bring about the relationship of the landlord and the tenant i. e., between the owner of the property and the Bank?

(3) Whether the agreement embodied in Ex. 1 requiring the Bank to pay Rs. 500/- Per month as rent is void and unenforceable being an agreement to pay rent in excess of the standard rent? If so, whether the standard rent has not been correctly assessed and it should be only Rs. 150/-?

(4) (a) Whether the plaintiff is entitled to interest at the rate of 9 per cent as claimed by him and (b) whether the plaintiff is entitled to costs as claimed by the appellant?

15. The first point need not detain us very long. It is not disputed, that the oral agreement on behalf of the Bank was entered into by the Chairman of the Bank and the Manager at Bombay Head Office. It is also significant that soon after this agreement the Chief Agent of the Bank at Jodhpur opened a 'Sundry Deposit Rent Account' and began crediting Rs. 500/- per month. There are some letters on record that the Chief Agent of the Bank at Jodhpur was in the know of the negotiations in connection with the settlement of rent for the period after 31-3-1949 and that he was a consenting party to the final agreement. We need only refer to one letter Ex. 37 addressed by the Chief Agent of Jodhpur. In our opinion, there is no substance in the contention that the Chief Agent, Jodhpur, had not executed the deed Ex. 1 and as such the bank cannot be deemed to have arrived at an agreement with the landlord fixing Rs. 500/- per month from 1-4-1949. The conduct of the Chief Agent in opening the account to credit Rs. 500/- per month is sufficient to repel this plea and it is unnecessary to enter into a detailed discussion of the evidence on this point.

16. On the second point the trial court relying upon: Mohan Lal v. Ganda Singh, AIR 1943 Lah 127 (FB); Ram Kumar Das v. Jagadish Chan-dra Deo, Dhabal Deb, AIR 1952 SC 23; Chiman Lal v. Sumer Singhji, ILR (1960) 10 Raj 938 = (AIR 1961 Raj 17); Md. Azizul Haque Chaudhury v. Debendra Kumar Pal, AIR 1959 Assam 57 held that even if the rent deed is not registered and is inoperative still it can be used for proving oral agreement of the lease and the tenancy that is created by legal implication would only be a monthly tenancy under Section 106 of the Transfer of Property Act. We have noticed the various cases and have no hesitation in coming to the conclusion that the defendant-tenant became a month to month tenant of the owner of the property.

17. The third controversy between the parties is the main one and there have been vehement arguments on either side in support of the rival contentions. The plaintiff-landlord's case is that in a suit for arrears of rent by a landlord it is not open to the defendant-tenant to raise a controversy that the rent agreed upon is in excess of the standard rent and he cannot pray for fixation of the standard rent. According to him, having regard to the definition of the standard rent in Section 3, sub-clause (vi) and provisions of Sections 5, 6 and 8 of the Act a tenant feeling aggrieved on account of the rent being excessive must file a suit under Section 6 of the Act for fixation of proper rent and must pay court-fee and obtain a decree. Mr. Maheshwari, on the other hand, contends that Section 8 of the Act should be interpreted widely and that under that section it is open to the tenant to contend that the agreement to pay a certain agreed amount of rent be declared void as it is in excess of the standard rent and a court is competent to consider and determine the standard rent and to declare the agreement relating to payment of rent as null and void and to treat the agreement, as if it were an agreement for the payment of the standard rent only.

18. At the out set it will be proper to notice the relevant statutory provisions bearing on the rival contentions made at the bar. Section 3, Sub-clause (vi) of the Act defines 'standard rent' as follows : 'Standard rent' used in relation to any premises, means the rent therefor determined in accordance with the provisions of this Act.' Section 5 provides that the rent payable for any premises situated within the areas to which this Act extends for the time being shall, subject to the other provisions thereof, be ordinarily such, as may be agreed upon between the landlord and the tenant.

19. Section 6 provides for a suit by a landlord or a tenant under certain circumstances for the fixation of standard rent. It also prescribes the procedure for determining the standard rent. It also contains some provisions for determining the quantum of the standard rent. As regards the quantum of standard rent the relevant provisions are that the standard rent charged by the plaintiff-landlord, where the premises are let for residential purposes or for other specified purposes, shall not exceed the basic rent increased by 50 per cent thereof. In respect of premises let for any other purpose, the standard rent shall not exceed two and a hall times the basic rent thereof. It has been further provided that in respect of the premises let after the first day of January, 1946, the standard rent shall not exceed the basic rent thereof. The explanation added to Sub-section (2) states that the basic rent of any premises shall mean that rent at which the premises were let on the first day of January, 1943, and, if not let on that day, the rent at which they were first let after that day. Sub-section (5) of Section 6 states that in every case in which the Court determines the standard rent of any premises under this section, it shall appoint a date from which the standard rent so determined shall be deemed to have effect. There is a further proviso providing that such date shall, in the case of a tenant who institutes a suit under this section after the expiration of six months from the commencement of his tenancy on the ground of the rent agreed upon being excessive, be the date of the institution of such suit or such later date as the Court may in the circumstances of the case deem reasonable. Section 8, Sub-sections (1) and (2), which are relevant for our present purpose, read as follows:

'Non-liability to pay in excess of standard rent--(1) Except' where rent is liable to periodical increment by virtue of an agreement entered into before the first day of January, 1943, and not superseded by or merged in a decree or order of the Court in any suit under this Act, no tenant shall, notwithstanding anything contained in any contract, be liable to pay to his landlord for occupation of any premises any sum in excess of the standard rent therefor decreed by the Court, unless such sum may lawfully be added to the standard rent in accordance with the provisions of this Act under a decree or otherwise.

(2) Any agreement for the payment of rent as such in 'excess of the standard rent shall be null and void and shall be construed as if it were an agreement for payment of the standard rent only.'

20. Section 10 prescribes the circumstances under which the rent can be increased and the extent of the permissible increase and Section 11 prescribes the procedure for the increase.

21. Before we proceed to scrutinize the rival submissions with regard to the interpretation of these statutory provisions it will be proper to notice the decision of this court bearing on the controversy raised before us.

22. The first case to be noticed is Gulabchand v. Kadheyshiam, 1954 Raj LW 585. In that case the plaintiff after determining the tenancy filed a suit for damages for use and occupation of a shop and prayed that the damages should be calculated on the basis of rent of neighbouring shops after determining the standard rent. The learned single Judge while rejecting the plaintiff's prayer for determination of the standard rent and awarding damages on this basis observed:

'It is not open to a landlord to realise increased rent by bringing a suit against his tenant for damages for use and occupation after giving him a notice determining his tenancy. If that were allowed, the purpose of the Act is liable to be defeated, and the provisions of the Act which provide the procedure for a party desiring variations in agreed rent would become redundant.'

Although it was a suit by the plaintiff praying for the fixation of a standard rent in an ordinary suit, the learned counsel for the plaintiff emphasised the latter part of the observations saying-that the provisions of the Act providing for the procedure for a party desiring variations in the agreed rent would become redundant. According to him, the defendant also must proceed under Section 6 of the Act in order to secure a variation in the agreed rent. We need only observe that this was a case by a plaintiff praying for the fixation of the standard rent in an ordinary suit. There is no discussion of Section 8. The observations relied upon by the plaintiff's counsel are in the nature of obiter dicta.

23. The next decision which was relied upon is Pannalal v. Bhonrey Lal, 1955 Raj LW 59. That was a case under which the provisions of Matsya Premises (Rent Control) Ordinance were discussed. Under that, a tenant could apply to the Rent Controller for the fixation of rent only in certain specified circumstances. Section 4 laid down that the rent should not be more than twice the rent payable for those premises or premises of a similar nature on the 1st day of January, 1951, in case of residential house, and in case of non-residential houses, the rent should not be more than 21/2 times the rent payable for those premises or premises of a similar nature on the 1st day of January. 1951. In that case the defendant was not entitled to approach the Rent Controller for the fixation of the rent and in the suit for arrears of rent the defendant resisted the plaintiff's claim for the agreed rent and wanted the fixation of a standard rent. The plea was disallowed by the trial court, but on a revision, the learned Judge of this Court accepted the revision and observed as follows:--

'Nevertheless, Section 4 provided a defence to the tenant in case the landlord wanted to enforce his agreement to pay rent in excess of the fair rent mentioned in that section. Section 4 laid down that the rent should not be more than twice the rent payable for those premises or premises of a similar nature on the 1st day of January, 1951, in the case of residential houses, and in the case of non-residential houses, the rent should not be more than 2| times the rent payable for those premises or premises of a similar nature on the 1st day of January, 1951. Any agreement contrary to the provisions of Section 4 would be one to which the provisions of Section 23 of the Contract Act became applicable, and such an agreement is not enforceable. It is obvious that the agreement if countenanced will defeat the provisions of the law made for the purpose of regulating rents and relieving tenants against the greed of landlords.'

This decision supports the defendant-tenant and is against the plaintiff-landlord.

24. In Gaya Parshad v. Basdeo, ILR (1957) 7 Raj 547 = (AIR' 1957 Raj 220.), which was a case under. Jaipur Rent Control Order, 1947, the learned single Judge of this Court had an occasion to consider the proper effect of clause 3 (2) of the Order, which clause provided that any agreement for the payment of rent in excess of the standard rent, as denned in the Order, would be null and void and would be construed as if it was an agreement for payment of the standard rent. This provision is similar to Section 8 (2) of the Act. In considering the effect of this provision the learned Judge made the following observations:

'' The agreement in excess of the standard rent is null and void from its inception. It is not as if it is to be declared null and void at a later date when the standard rent has been determined by the Controller. Further that agreement is to be treated as an agreement for the payment of standard rent (from, the date it is executed. It is not after the determination of the standard rent under clause 6 of the Jaipur Rent Control Order that it has to be construed for payment of standard rent only. Section 3 (2) does not prescribe that some . steps must be taken before it could have effect as contemplated in that clause. The form for the determination of the standard rent under Clause 6 could be utilised by the parties, but that did not stop the operation of clause 3(2). Viewed in this light, I do not think that the right of the defendants not to pay anything in excess of the standard rent is contingent on the determination of the standard rent by the Controller under clause 6. The defendants can very well urge before the Civil Courts when faced with suit by the landlord for the recovery of rent in excess of the standard rent that they are not liable to pay it and that any agreement between the parties for payment of rent in excess of the standard rent was null and void.'

It may be mentioned that the observations made in this judgment with reference to clause 3 of the Jaipur Rent Control Order, 1947, are applicable with same force to the provisions of Section 8 (2) of the Act, which are in the same term.

25. The case of Gyanchand v. Madanlal, 1964 Raj LW 12 this Court deals specifically with the interpretation of the provisions of the Act. In this case the observations made by this court in Gaya Parshad's case, ILR (1957) 7 Raj 547 = (AIR 1957 Raj 220) were relied upon by the defendant in support of his contention that under Section 8 of the Act the defendant can agitate a controversy that the agreement about the rent being an agreement to pay the rent in excess of the standard rent is invalid, The learned Judge noticed in detail Gaya Parshad's case and quoted the observations, some of which were extracted above. The learned Judge, however, compared the provisions of the Jaipur Rent Control Order with the provisions of the Act and observed:

'It is true that both under the Jaipur Rent Control Order and the Act there are similar provisions to the effect that any agreement for payment of rent in excess of the standard rent shall be null and void and shall be construed as if it was an agreement for payment of the standard rent only and the Civil Courts are not debarred from examining the validity of the agreement from that point of view. But it is one thing to examine the validity of the agreement and quite another to determine the standard rent. Under the order according to Clause 2 (b) (i) read with Clause (3) of Second Schedule, the standard rent is fixed as if it was attached with the property from the date the Order came into force, and the court is not required to make any investigation and on the face of the agreement, can say that it is in excess of the standard rent. But this cannot be said in cases governed by the Act.'

26. We have also compared the provisions of the two enactments and with great respect state that we are unable to endorse the view taken in Gyanchand's case, 1964 Raj LW 12. We are unable to agree that the determination of standard rent under the Jaipur Rent Control Order is invariably a mechanical process and excludes altogether any kind of investigation and the exercise of discretion by the Controller. Sub-clause (1) of Clause 6 of the Order provides that if any dispute arises regarding the standard rent payable in respect of any premises it shall be determined by the Controller, Sub-clause (2) provides that where for any reason it is not possible to determine the standard rent of any premises on the principles set forth in the second schedule, the Controller may, on the application of any person interested or on his own motion, determine the standard rent and in so doing, shall have regard to the pre-war rent, prevailing rent, standard rent of similar premises in the same locality, various amenities e.g., electricity etc. special reasons and other relevant considerations. This being the position, it will be hardly proper to hold that the standard rent under the order is invariably fixed as if it was attached with the property. At the same time, there are provisions in the Rajasthan Act under which the determination of the standard rent will in some cases be a mere mechanical process. In case of premises having been first let out after the 1st of January, 11946, the standard rent shall not exceed the basic rent, thereof. The basic rent, as defined in the explanation, will automatically determine the standard rent. Further, Section 6 defines the basic rent as the rent at which it was let on the first day of January 1943 and in respect of premises let thereafter the rent at which they were let after that day. The basic rent thus in some cases shall stand automatically determined. There are provisions in Section 6 stating that the standard rent shall not exceed 21/2 times the basic rent in cases of certain type of premises and by 50 per cent in cases of other type of premises. In many cases, therefore, the determination of standard rent will be more or less a mechanical process and there need not be any kind of investigation. We need only refer to the facts of the present case to illustrate the position. In the present case the parties are agreed that the premises were let after 1st of January, 1943, for the first time i. e., in March, 1944. The rent then payable was Rs. 150/-, It automatically became the basic rent. The standard rent could not exceed 21/2 times of the basic rent and, therefore, could not exceed Rupees 375/-, per month. An agreement to pay Rs. 500/- per month can be easily treated as one to pay rent in excess of the standard rent without any kind of investigation and the reasoning adopted by the learned single Judge in Gyan-chand's case could be easily available for the scrutiny of the validity of the agreement in the present case. In the light of these discussions, we are of the opinion that there is no such vital difference between the provisions of the Jaipur Order and the Act so as to make the observations of the single Judge in Gaya Parshad's case ILR (1957) 7 Raj 547 = (AIR 1957 Raj 220) applicable in a case arising in the Jaipur Order and not in a case arising under the Rajasthan Act.

27. In this judgment the learned Judge further referred to Sub-section (5) of Section 6 and pointed out the difficulties in providing relief to a tenant in a case where the controversy is sought to be raised in defence by way of a written statement. The learned Judge observed as follows:

'Even if the court in a suit for arrears of rent is competent to determine the standard rent of the premises on the objections raised, it would be of no avail in the circumstances to him in view of the above provisions when the question comes before the court after the expiration of six months from the commencement of the tenancy. The earliest date for fixation of the standard rent would in that case be the date of the written statement and obviously that would be a date subsequent to the period for which the suit for arrears is instituted.'

We shall consider the interpretation and proper implication of Section 8 of the Act at a later stage, but we must in passing observe that the difficulty need not stand in the way of the determination of the standard rent for protecting the tenant from payment of rent in excess of the standard rent in future.

28. Lastly, the learned Judge placed great reliance upon Section 5 of the Act and observed that this unmistakably lays down that the rent payable for any premises, subject to the other provisions of the Act, be ordinarily such, as may be agreed upon between the landlord and the tenant. Under the general law also a tenant is bound to pay rent as agreed upon between him and the landlord. The Act provides a remedy to a tenant for getting the standard rent fixed in case he claims it to be excessive by filing a suit. If the tenant does not avail of the remedy provided under the law, he cannot be heard to say in a suit filed by the landlord for recovery of arrears of rent on the basis of the agreement that it is in excess of the standard rent because till then, no standard rent has been determined and the court cannot, therefore, say that the agreement is for the payment of rent in excess of standard rent and thus null and void.

29. The view propounded in this case appears to us to be based upon a little exaggerated importance to the liberty of contract and lapses and omission on the part of tenants and to ignore the purpose of the Act and the mischief it is intended to suppress and the nature of the rights created by enactment. We must point out the background in which the Rent Control Legislation was introduced. It is a matter of history that after the second world war there were tremendous economical changes and there was a great migration of population to the urban areas. This gave undue impetus to the motive for profit to the greedy landlords. The demand of the landlord for increase in rent went on increasing and ultimately the Legislature had to intervene to give protection to the tenants against the greed of the landlords. It may also be pointed out that the Act does not create mere personal rights which can be extinguished either on account of lapse, release or waiver and acquiescence. The Act creates certain social rights and seeks to protect the tenants from any unfair agreements even though they have been voluntarily agreed and even though there may be no elements under the general law invalidating such an agreement. If a tenant is entitled to claim protection against the agreement requiring payment of rent in excess of standard rent, it will be hardly in keeping with the purpose of the Act if this right be allowed to be extinguished on account of failure of the defendant to file a suit as required by Section 6. In view of what has been stated above we are not inclined to agree with the view taken in this case. A view that a landlord is entitled to enforce an agreement even though it is one revising and increasing the rent evidently and apparently in excess of the standard rent and in disregard to the provisions of Section 10 of the Act, unless a tenant files a suit under Section 6 of the Act and gets a decree for fixation of standard rent, will result in rendering the protection including one against unwarranted and unjustifiable increase of rent provided by the Act, in general and Sections 10 and 11 of the Act in particular prohibiting increase in rent beyond certain limit and prescribing the procedure for obtaining increase in rent, illusory.

30. We now proceed to examine the scope, interpretation and the implications of the various provisions having bearing on the controversy. Section 3 (b) (vi) defines 'standard rent' as determined in accordance with the provisions - of the Act. Section 6, however, provides for a suit for a fixation of standard rent. The words 'determination of rent' and the 'fixation of rent' cannot be treated as synonyms of each other. Section 3 (b) (vi) by itself cannot necessarily imply that the determination of the standard rent can be sought only in a suit for fixation of the standard rent. It does not exclude the other modes whereby the standard rent can be determined apart from its fixation by way of a suit under Section 6 of the Act.

31. Taking up Section 5, we need only observe that while Section 5 permits the landlord to recover the rent as agreed, the section has been made subject to the other provisions of the Act. According to the plaintiff-landlord the only provision to which Section 5 should be read is subject to Sections 6 and 11 and that the plaintiff is entitled to the agreed rent unless the rent is properly fixed under Section 6 or increased under Section 11. The expression 'other provisions of the Act' used in Section 6 is obviously a term of wide import and there is no justification in limiting these words to Section 6 and Section 11 only. Section 6, as is noted above, provides for the institution of a suit by the landlord and the tenant for the fixation of standard rent and also provides for the procedure for the determination of the standard rent. It does not contain any bar for the determination of a controversy in connection with the determination of the standard rent in any other appropriate proceedings.

32. Lastly, we take Section 8. Section 8 is in general terms and provides that any agreement for the payment of rent in excess of the standard rent shall be null and void and shall be construed as if it were an agreement for payment of the standard rent only. There is nothing in Section 8 to indicate that Section 8 will come into operation only after the rent is fixed under Section 6 of the Act. We may also observe that it is difficult to reconcile Sections 8 and 6 (5). The proviso of Section 6 (5) lays down as follows :--

'provided that such date ' (a date from which the standard rent shall effect)' shall, in the case of a tenant who institutes a suit under this section after the expiration of six months from the commencement of his tenancy on the ground of the rent agreed upon being excessive, be the date of the institution of such suit or such later date as the Court may in the circumstances of the case deem reasonable,'

Section 8, however, provides that after the standard rent is determined an agreement in payment of a rent, in excess of it, would be null and void, from its inception and it will be treated as an agreement to pay a standard rent from the date of the agreement. These two provisions, therefore, cannot be reconciled with each other. Haying regard to the difficulty of reconciling these two provisions and having considered the scheme of the Act we are inclined to take the view that Section 6 and Section 8 of the Act cover separate sphere and provide for different situations. Under Section 6 a tenant considering that the agreed rent is excessive can file a suit for the fixation of the standard rent. In such a suit the court is required immediately to embark upon an enquiry into the standard rent. A tenant is not required to prove affirmatively that a marked difference exists between the standard rent and the rent claimed to be excessive. The court is expected to weigh all considerations just and fair to both the parties and after weighing the relevant considerations, to fix a standard rent fair to both the parties concerned. The defendant tenant is not required to prove affirmatively the invalidity of the agreement about the rent. This being the nature of the proceedings, the right has been reserved to the court to fix a date later than the date of the agreement as the date from which the standard rent is fixed to operate. On the other hand Section 8 appears to be intended to entitle the defendant to plead the invalidity of the agreement with regard to the rent on the ground that the agreement for the payment of rent is in excess of the standard rent. The defendant is naturally required affirmatively to prove the circumstances invalidating the agreement and entitling him to some relief. The burden of proof under Section 8 is higher than the burden under Section 6. This view is supportable on the consideration of both the provisions. It also avoids the conflict between the provisions of Section 6 (5) and Section 8. In doing so we have been guided by the principle that the Rent control legislation is a beneficial legislation for the protection of the tenant and if there is any doubt about the meaning of the wordings used in the statute, the doubt should be resolved in favour of the tenant. In our view it is open to a defendant in a suit by landlord for enforcing an agreement for arrears of rent to plead that the agreement is unenforceable being an agreement to pay rent in excess of the standard rent. We are also of the view that the remedy by way of a suit for the fixation of the standard rent is not the only mode for the determination of the standard rent and the standard rent can as well be determined in a suit of a landlord against a tenant on a plea of the defendant as to the validity of the agreement on the principle relevant for the determination of the standard rent.

33. We may at this stage take note of the Supreme Court judgment in Civil Appeal No. 1461 of 1969 fSC). M. M. Chawala v. J. S. Sethi decided on the 15th September, 1969. That was a case under the Delhi Rent Control Act (59 of 1958). Under the scheme of that legislation the remedy for the fixation of the standard rent and for ejectment lay by means of an application to the Controller of rent. For the recovery of rent a landlord is required to file a suit in a Civil Court. In connection with a landlord's application for ejectment it is open to a tenant to deposit the amount of rent and to resist the prayer for ejectment and thus avoid the liability for ejectment. A question arose whether on any application by a landlord for ejectment on the ground of default committed by the tenant, the tenant can raise a issue that the rent agreed was in excess of the standard rent and that standard rent should be determined and the tenant should not be ejected without a determination of that controversy, The Supreme Court after referring to the relevant provisions of the Act and overruling the plea of the tenant-defendant, observed that, -- 'It is not implied that standard rent is to be determined as an issue arising in the action for ejectment.' Apart from that there is nothing in the decision of the Supreme Court to show that in an application by a landlord for ejectment the tenant is wholly unable to agitate a controversy about the standard rent and to get a proper decision. On the other hand it was clearly observed in that judgment that,--

'If in a proceeding under Section 14 (1) (a) the tenant raises by way of defence a contention that the standard rent be determined the Controller may treat that as an application under Section 12 and deal with it according to law. But the Act confers no power under Section 15 (3) upon the Controller. The power to determine standard rent is exercisable under Section 12 only.'

It may also be observed that in the Delhi Rent Control Act a period of limitation is prescribed for the filing of application by a tenant for the determination of the standard rent and it was observed that in treating the written statement as an application of the tenant for the fixation of the standard rent, the period of limitation should also be taken into account. The observations of the Supreme Court in this behalf have no applicability in the cases under the Rajasthan Act, as the Rajasthan Act does not provide for any period of limitation for a suit by a tenant for the fixation of the standard rent. We may also observe that the observations of the Supreme Court with regard to the consideration of the tenant's prayer for the fixation of the standard rent under Section 15 (3) also have no applicability in the view of Section 8, which we have taken above. In our opinion the principles laid down in the Supreme Court's judgment in connection with the Delhi Rent Control Act (Sections 4 and 5) could have no bearing in the present case, having regard to the difference in the scheme of the two legislations and the difference of language and the wordings of the various provisions. It will be significant to refer to the following obserrations of the Supreme Court:

'The judgments to which' our attention was invited appear to have proceeded upon earlier judgments of the Punjab High Court in Lala Manohar Lal Nathan Mal v. Madan Lal Murari Lal, AIR 195G Punj 190 and Smt. Radhey Piari v. S. Kalyan Singh, AIR 1959 Punj 508. But both these cases were decided on the interpretation of Sections 8 to 11 of the Delhi and Ajmer Rent Control Act 38 of 1952 in which it was expressly provided that the standard rent shall be fixed on an application made to the Court for that purpose or in an application in any suit or in any proceeding. We need express no opinion on the question whether the cases under the Delhi and Ajmer Rent Control Act 38 of 1952 were correctly decided. But the difference in the phraseology used in the Delhi Rent Control Act 59 of 1958 does not appear to have been noticed in the judgments cited at the Bar in support of the contention that to a written statement filed by a tenant when an application is made under Section 14 (1) (a) the conditions of Section 12 do not apply.'

34. We may also mention that earlier the Supreme Court emphasised the fact that the remedy for fixation of the standard rent lay before the Rent Controller and not a Civil Court.

35. The learned counsel for the plaintiff-landlord also relied upon a few cases of the Madras High Court and the Andhra Pradesh High Court. We consider it unnecessary to notice them in detail as their facts are not similar to the facts of the present case. On a review of decisions cited at the Bar and on a consideration of the true scope and implications of the various provisions, we are , of the view that in a suit for recovery of arrears of rent by a landlord it is open to a tenant to plead that the agreement for paving a certain amount of rent is unenforceable, illegal and void on account of its being an agreement to pay rent in excess of the standard rent and that the court is competent to determine the standard rent.

36. There is one more angle from which the matter may be looked at. Even if the wide interpretation of Section 8 is not permissible yet we find no serious difficulty in holding that in a suit by a landlord for the recovery of a rent the written statement of tenant pleading the invalidity of an agreement relating to the payment of rent in excess of standard rent and praying for the determination of standard rent can be treated as an appropriate proceeding under Section 6 of the Act. There is no bar under the general law or under the provisions of the Act prohibiting such a suit. The observations of the Supreme Court in M.M. Chawala's case, C. A. No. 1461 of 1969, D/-15-9-1969 (SC) can also be pressed in support of the view stated above. In the present case the trial court on the consideration of the pleadings of the parties and other materials on record thought that the parties joined issue on the question of the validity of the agreement in respect of the payment of rent and framed issues in both the suits. These issues are Nos. 6 and 10 in the earlier suit and 7 and 8 in the second suit and finally after hearing the counsel for the parties decided the issues in favour of the tenant-defendant. The plaintiff-landlord did not appear to have seriously objected to that. At any rate, he did not press his objection to the extent of obtaining a decision as on preliminary objection. Had the trial court upheld the objection ,pf the plaintiff-landlord then the tenant would have been in a position to file a regular suit under Section 6 in a competent court. The parties having joined the controversy and having allowed it to be determined in the suit, it will be hardly proper and fair now to ignore the decision of the trial court on the technical plea that such a mode was not correct. The contention of the plaintiff-landlord thus deserves to be repelled. Of course the rejection of the plaintiff's plea on this ground would make some difference, as to the date from which the standard rent could operate. The two alternatives in this connection can be (i) that the written statement should be treated as a plaint for the determination of the standard rent and the date of the written statement as the date of the commencement of the suit. In this view of the matter the standard rent could operate from the date of the filing of the written statement or from some later date to be fixed by the Court and (ii) that the main provision in Section 5 giving wide discretion to the court in the matter of fixing of the date of the operation of; the standard rent in all cases for determination of standard rent, the proviso should be construed strictly and should be confined to a special case where the standard rent is determined in a suit by the tenant under Section 6, and should not be extended to a case where the rent is determined in a suit by the landlord for the recovery of arrears of rent on a plea in the written statement. As we have overruled the plaintiff's plea by our adopting a wider interpretation of Section 8, we do not propose to express any firm view as to which of the two alternatives be preferred.

37. The next question that arises Is whether the standard rent, which has been assessed by the trial court is correct. The learned counsel for the defendant Bank contends that there was no justification for trial court to have assessed the rent on maximum limit figure of Rs. 375/- and that the trial court ought to have decreed the plaintiffs' suit (5) Rs. 150/- per month. We must, in this connection, make a mention of the conduct of the defendant Bank. After the expiry of the term of the initial lease, which was for a period of 5 years expiring on 31st March, 1949, negotiations started between the parties for the fixation of the rent for the future. There was a long and protracted correspondence between the parties. The matter was considered at the highest level by the Chairman of the Bank and the Manager at Bombay Head Office. In all this the Chief Agent of the Bank at Jodhpur had also participated and after considering the nature of the buildings and various circumstances of the case, the Chairman of the Bank advised the Manager of the Head Office to fix the rent for future at Rs. 500/-per month. Not only this, but even the Chief Agent of the Bank at Jodhpur carried out the oral agreement arrived at Bombay and opened a Sundry-Rent deposit account and credited Rs. 500/- every month. At no stage any controversy was raised as to the reasonableness or otherwise of the agreed rent of Rs. 500/- per month. Having regard to this conduct, the trial court was fully justified in determining the standard rent at 21/2 times of the basic rent of Rs. 150/- per month. We fail to understand how it is open to the defendant now to argue that the standard rent could not be determined at Rupees 375/- per month. The conclusion of the learned trial court that the standard rent should be assessed at Rupees 375/- per month is perfectly in order and calls for no interference.

38. The next controversy between the parties is as to the quantum of amount that should be added to the standard rent on account of the expenses incurred by the plaintiff carrying out improvements during the pendency of the lease. The parties are not at controversy that a sum near about Rs. 8,200/- was spent on the improvements on the premises leased to the Bank. There is also no controversy as to the period during which this amount was invested. On the basis of the record of the Bank brought on the file of this case, it appears, the expenditure for improvement was incurred between the period from 22nd June, 1951 to 23rd May, 1953. There is no material on record to show whether the entire expenditure was incurred only on one account of improvement or on several different items of improvement. One thing, of course is clear that an amount of Rs. 1,000/- was spent for the construction of a latrine for the use of the tenant in June 1951. There is no reason why the plaintiff-landlord should not be permitted to increase an appropriate additional amount to the standard rent on account of the expenditure on this item. With regard to the rest of the expenditure in the absence of any material to suggest, whether the expenditure was incurred on separate items of improvement or only on one, we feel some difficulty in fixing the date from which the additional rent should be added to the standard rent. However, having considered the various suggestions made at the Bar, we consider it fair to allow the addition of the amount in the standard rent with effect from 1st January, 1952.

39. Mr. Maheshwari also suggested that the amount of Rs. 56/- per month calculated by the trial court is not a proper amount to be added. According to him on calculating the amount at 71/2 per cent on a total amount, the correct figure should have been calculated at about Rs. 51/-. We have made the calculation for ourselves and reached the conclusion that the contention of the counsel for the defendant-tenant is correct. The amount to be added to the standard rent should have been, fixed at Rs. 51/- and not at Rs. 56/-.

40. The next controversy between the parties is with regard to the interest on the arrears of rent prior to the suit. The plaintiff claimed interest at 9 per cent per annum and relied upon the provisions of the Interest Act. According to him he was entitled to interest even on arrears of rent after he made a demand for the amount under notice and the defendant-tenant refused to pay the amount. The defendant tenant's case is that no interest should have been allowed on the arrears of rent. The trial court after considering the submissions of both the parties have thought it proper to allow interest on the arrears of rent prior to the suit @ 41/2 % per annum. In our opinion, the discretion exercised by the trial court is correct and there is no good ground for interference. The amount of interest should be calculated @ 41/2 % per annum from 1st August, 1954.

41. Lastly, the learned counsel for the parties have addressed us on the question of costs. The plaintiff claimed that he should have been allowed costs on the amount claimed by him in the suit. He admits that the amount claimed could not be decreed, because during the pendency of the suit the defendant paid an amount of Rs. 1,527/-on account of electricity and water charges. It is also contended that the plaintiff while calculating the amount due to him from the defendant did not give any credit to the amount' spent by the, defendant-tenant on fixing of shutters etc. His grievance in this connection is that although he required the Bank to give the account of the amount spent by the Bank, the Bank refused to give any account and consequently he had no alternative, but to claim the amount without giving credit for the amount spent by the Bank on improvements. While we consider that the plaintiff was entitled to costs on amount of Rs. 1,527/- included in the amount claimed in the suit, there is no reason to allow costs to the plaintiff on the amount spent by the Bank on improvement, which was not eventually decreed in favour of the plaintiff, even though the plaintiff was forced to include the amount in the claim in the absence of the accounts. This was a good ground for depriving the defendant of the costs on this item, but this could hardly be a ground for allowing the costs to the plaintiff even though the claim of the plaintiff could not be decreed in this behalf.

42. The plaintiff also claimed compensatory costs, perhaps on the ground that the defence of the defendant was frivolous and false to his knowledge. We have considered the pleadings of the parties. The plaintiff in his replication no doubt claimed compensatory costs, but there are no necessary averments in the pleadings to bring the case within the meaning of Section 35-A. The trial court did not allow the compensatory costs and we are not also satisfied in allowing the compensatory costs to the plaintiff.

43. We may notice at this stage that the trial court had allowed interest to the plaintiff on the decretal amount at 6 % per annum. The counsel for the plaintiff contends that the direction of the trial court necessarily covered the arrears of the rent decreed due to the plaintiff up to the date of the plaintiff's suit. The decree, according to him should include the amount on account of arrears of rent payable to the plaintiff up to the date of the decree that is 24th September, 1960. We consider that the direction in the trial court's judgment should be construed to mean that the plaintiff will be entitled to future interest on the decretal amount on account of the arrears of rent up to the date of the decree.

44. In the light of the above discussions the result is that the defendant Bank's Appeal Nos. 7/61 and 8 of 1961 are partly allowed. The plaintiff-landlord will be entitled to standard rent @ Rs. 375/- per month from 1-4-1949 to 31st Dec. 1951. He will be entitled to standard rent @ Rs. 426/-per month with effect from 1-1-1952 up to the date of eviction. The appeal No. 19 of 1961 of the plaintiff is partly allowed and he will be allowed costs on the amount of Rs. 1,527/-. The rest of the appeal is dismissed. The appeal No. 20 of 1961 of the plaintiff-landlord is also dismissed.

45. The parties are left to bear their own costs of this Court.


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