K. Srinivasan, J.
1. When Madras Act (XVIII of 1960) was passed, Section 30 was enacted therein exempting from the operation of the Act any non-residential building, the rental value of which on the date of the commencement of that Act as entered in the tax assessment book of the municipal council or other local body exceeded Rs. 400 per mensem. This provision was amended by Madras Act (II of 1962) substituting in the place of the rental value entered in the tax assessment book, the monthly rent paid by the tenant. This exemption was removed later by Act (XI of 1964.) In between the dates of the passing of the two latter Acts, the landlords of certain premises, the respondents in this petition, filed an application before the House Rent Controller--H.R.C. No. 2942 of 1963--for the fixation of fair rent. The tenant came to this Court contending that since the tenancy was under a contractual arrangement by means of a registered lease deed for a term of years, the House Rent Control Act could not apply to this tenancy. Apart from this general contention, it was also claimed that the monthly rental payable by the tenant was in excess of Rs. 400, so that by reason of Section 30 of the Act as amended by Act (II of 1962), the Act could not apply to such a tenancy. On the first of these questions whether the Rent Control Act could govern contractual as well as statutory tenancies, the matter was referred to a Full Bench, and the Full Bench delivered its opinion that the Madras Act constituted a self-contained code, and notwithstanding the existence of a contractual tenancy for a term, the provisions of the Act would apply. Vide Raval & Co. v. Ramackdndran : (1966)2MLJ68 . Thus, only the second of the questions referred to above calls for examination in this writ petition.
2. The contention on behalf of the petitioner is that on the date of the application made by the respondent-landlords, tenancies in respect of which the tenant was paying a monthly rent in excess of Rs. 400 stood outside the scope of the Act, for Section 30 laid down that nothing contained in the Act shall Apply to such tenancies. It is claimed accordingly that on the undeniable facts presently to be set out the rent of the premises is in excess of that figure, and the petition which was filed during the period when this exemption Was operative was not maintainable. It is upon this question whether the rent of the premises is in excess of the sum of Rs. 400 that the present controversy has arisen.
3. Certain facts require to be stated. Under a demise of lease of the year 1935, the then owner of the property leased out the premises described as No. 2, Poonamallee High Road, Madras, to the petitioner, the tenant, for a period ending with 30th April, 1969. Clause (3) fixed the rent at Rs. 225 per mensem. The lessees were permitted to erect structures, and to make additions or alterations after notice to the lessor. The lessees could on the termination of the lease remove the new erections put up by them, unless by agreement between the parties the lessor elected to pay compensation for such additions and alterations : Clause (10) provided that the lessor shall execute all repairs necessary to the buildings standing on the premises when the lease comes into force, and towards the cost of such repairs, the lessees were to contribute an annual sum of Rs. 225. Under Clause (II) the lessor undertook to pay all the charges and taxes of a public nature and the lessees were to contribute an annual sum of Rs. 220 towards such charges and taxes. There was a clause enabling the continuance of the lease for a further terms of fifteen years. According to the petitioner, the tenant, during the currency of this lease, it has spent considerable amounts and made extensive additions, improvements and alterations to the property. In 1946, the then owner claimed a 50 per cent, increase in the rental on the ground that the Rent Control Act applied to the lease. After some correspondence, in which the tenant disputed its liability, a settlement is said to have been reached, whereunder without prejudice to the rights of the tenant, the tenant agreed to pay an increased rent. Statements of accounts were exchanged between the parties, and according to the tenant, the tenant agreed to pay 25 per cent, more as increase in rent and also to bear the extra municipal taxes as and from the 1st October, 1946. The position as it stood on the 1st of June, 1954 was that, in addition to the payments stipulated in the lease deed, the tenant paid extra municipal tax of Rs. 1,212 per year and a 25 per cent, increase in the original stipulated rent, which came to Rs. 675, the total sum paid during the year being Rs. 5,032 working out to a monthly payment of slightly over Rs. 418. It is the contention of the tenant that the entirety of this sum represents the rent paid by the tenant and it being in excess of Rs. 400, the Act did not apply as on the date on which the application for fixation of fair rent was made.
4. The respondents are the purchasers of the interest of the original landlord. It appears that the property which was described as No. 2, Poonamallee High Road has subsequently been given two municipal door numbers, Nos. 16 and 17. The rent for the premises is only Rs. 225 per month for both of these numbers. It is admitted that the tenant has been paying a 25 per cent, increase in the rent. It is also admitted that two other payments stipulated in the lease deed towards annual repair charges and contribution towards municipal charges were being paid. The respondents, however, claim that these amounts were being received by them without prejudice, whatever that expression may mean. It is not, however, denied at this stage that the tenant entered into possession of the property under a registered lease deed from the previous owner. It is, however, denied that except for the 25 per cent, increase over the monthly rent of Rs. 225 stipulated in the lease deed, the other payments are rent in any sense and cannot be taken into account for the purpose of determining whether the rent of the premises is in excess of Rs. 400. In paragraph 10 of the counter-affidavit it is denied that the average monthly rent is Rs. 419 odd as alleged in paragraph 7 of the affidavit accompanying the petition, and it is asserted that the monthly rent is only Rs. 225 plus the extra rent of 25 per cent. It may, however, be stated that the landlord-respondents do not deny that a total amount of Rs. 5,032 as set out in paragraph 6 of the affidavit accompanying the petition is being received by them. In this affidavit there is the clear averment that the present owners, respondents 1 to 3, are being paid rent on the basis mentioned. The position is accordingly that while the respondents do not deny the receiving a sum of Rs. 5,032 per year, they claim that only Rs. 2,700 plus Rs. 675 represent in reality the rent and the balance of the payment is not rent.
5. The balance of the payment referred to is the extra municipal tax. The question accordingly is this : when the tenant and the landlord agree that the tenant shall make a contribution towards the extra municipal tax does such payment become merged with the rent within the meaning of the Rent Control Act.
6. In one of the letters proceeding from the landlord, dated 16th April, 1949 the landlord in acknowledging the receipt of rent and other payments stipulated in the lease deed for the period 1st January, 1949 to 31st December, 1949 stated thus:
I am afraid you have overlooked the increased property tax levied from 1947-48 first half to 1948-49 second half as follows:
Rs. A.P. First half year Excess paid on1947-48. your behalf. ... 525 5 1 Second half year Do. ... 525 5 11947-48First half year Do. ... 525 5 11948-49. Second half year Do. ... 525 5 11948-49. ________________2,101 4 4.________________I have already paid the above amounts on your account as and when claimed. I shall therefore be glad if you will send me your cheque for this amount to keep your account straight.
The tenant paid this amount, without prejudice to the rights of the parties as appears in a letter, dated 19th August, 1949. Thereafter followed correspondence seeking an increase of rent, which ended in the landlord accepting a 25 per cent, increase. In a letter, dated 28th June, 1954, the then owner wrote to the petitioner bringing to the petitioner's attention that the tax on the property had been raised and an amount of extra tax was payable by the petitioner.
7. After the present respondents purchased the property, the tenant-petitioner wrote a letter to the respondents bringing to the notice of the respondent. the payments that had been made earlier and sending a cheque for the amount due for the subsequent period since the last payment. It would suffice to rest with this statement of facts for the present in considering whether the excess payments made by the tenant constitute rent or not.
8. Mr. V. K. Thiruvenkatachari for the petitioner contends that under Section 105 of the Transfer of Property Act, the expressions lease and rent are defined. According to the section, a lease of immovable property is a transfer of a right to enjoy such property,
in, consideration of a price paid or promised, or of money, a share of crops, service, or any other thing of value, to be rendered periodically or on specified occasions, to the transferor by the transferee, who accepts the transfer on such terms.
The money, share of crops, service or any other thing to be so rendered is called the rent. The Madras Buildings (Lease and Rent Control) Act does not define rent and it is the contention of the learned Counsel that any periodical payment of whatever kind made as consideration for the right of enjoyment of the property under the lease must be recognised as rent under the law. It is well settled that in the Transfer of Property Act, the term rent has been used in a Very wide sense. The expression rent is obviously the remuneration or recompense which the landlord asks for and obtains from the tenant. There seems no reason why a payment which the lessor calls upon the lessee to make and the lessee agrees to make as consideration for the privilege of enjoyment of the property on whatever account that sum might be demanded, should not be regarded as rent. So long as the payment is connected with the right of occupation of the premises, the nomenclature given to the payment should make no difference in principle, and the totality of such payment must in the eye of the parties and in the eye of law be regarded as rent. That in short is the argument presented by Mr. V. K. Thiruvenkatachari.
9. In Karnani Properties Ltd. v. Augustine : 1SCR20 , the question arose whether certain payments stipulated to be paid by the tenant could in law be called rent. The West Bengal Premises Rent Control Act under which the question arose did not define rent. Their Lordships of the Supreme Court observed that in the absence of any such definition in the relevant Act, the expression must be taken to have its ordinary significance and that the term rent is comprehensive enough to include all payments agreed by the tenant to be paid to his landlord for the use and occupation not only of the building and its appurtenances but also furnishings, electric installations and other amenities agreed between the parties to be provided by and at the cost of the landlord. The question that arose there Was whether the charges in respect of other amenities, which were so includible in the term rent could come within the purview of the Rent Controller under the Act in determining the standard rent or a fair and reasonable rent. In that case, the relevant clause in the contract of lease provided that the rent stipulated was inclusive of charges for current, for fans, lights radio, electric stove...use of left and the owners and occupiers shares of municipal taxes. The contention was apparently advanced that where by stipulation between the landlord and the tenant the landlord agrees to provide additional amenities, the case is taken out of the operation of the Act. Their Lordships refer to certain English decisions and conclude that the sum total of the payments in respect of the building or part of the building and other services and amenties would consitute rent. They say at page 28:
If, as already indicated, the term ' rent ' is comprehensive enough to include all payments agreed by the tenant to be paid to his landlord for the use and occupation not only of the building and its appurtenances but also of furnishings, electric installations and other amenities agreed between the parties to be provided by and at the cost of the landlord, the conclusion is irresistible that all that is included in the term ' rent' is within the purview of the Act.
It will be remembered that in the present case also, the original registered lease did make the tenant liable to contribute towards the taxes in addition to a sum which was specifically described as rent. But this authority certainly supports the contention that the total of the payments made by the tenant, in so far as these payments form the consideration for the right of enjoyment of property, must be regarded as rent.
10. In a decision of the Andhra Pradesh High Court S. Yusufuddin v. A. V. Ramalingam & Co. (l958)An dh.L.T. 723, the question Was considered whether when the tenant had been paying the taxes, such payment could not be held to be part of rent. The learned Judge observed that there is nothing in Section 105 of the Transfer of Property Act which would show that such payments would not fall within the meaning of rent. The question arose only incidentally in determining the quantum of fair rent. In Navanitprasad v. Ahmedabad Municipality : AIR1957Bom163 , the meaning of the expression rent in the context of the taxation rules under the Municipal Corporation Act was in question. The learned Judges observed that the primary liability to pay municipal taxes is upon the landlord and not upon the tenant. Where, however there is a covenant between the two and under that covenant the tenant is to pay in addition to the rent the municipal taxes as well, it could well be that that was a consideration while granting the lease, and they held that payment of municipal taxes may well be in the nature of rent, though not strictly so called. They also notice the definition of rent in Section 105 of the Transfer of Property Act. In F. K. Nivendkar V.P. Ram Singh (1963) 2 S.C.J. 453, the question of a donation received in respect of the grant of a lease was considered. The landlord was a public trust and it agreed to grant the lease of the premises at a monthly rental of Rs. 85 in favour of the tenant on a payment of a further sum as donation to the building fund of the sangh. The receipt of this sum was admitted by the landlord. The question was whether the amount was received as premium as a condition precedent of the letting of the premises, which was opposed to the provisions in the Bombay Rents Hotel and Lodging Houses Rates Control Act, 1947, and their Lordships held that as the donation was received in respect of the granting of the lease and not as a free donation, it would come within the expression of premium or consideration in the relevant section. The principle of this decision would certainly appear to apply in the case of payments stipulated to be paid by the tenant to the landlord as part of the lease arrangement.
11. Mr. V. Thiagarajan, learned Counsel for the respondent-landlords, contends that the rent under the lease is only Rs. 235 stipulated as rent in the registered lease deed; or at the highest it could only include the two sums specified in that document, that is to say, the annual payment of Rs. 225 towards repairs and the further sum of Rs. 220 as annual contribution towards taxes. There is certainly no doubt that the payment of a portion of the tax was a condition precedent to the grant of the lease and if that operated as consideration for the grant of the lease, that sum also would partake of the character of rent. It is not denied by Mr. Thiagarajan that by a subsequent agreement between the parties the tenant was in fact contributing a sum of over Rs. 1,000 per year towards excess taxes. Why this payment of taxes should assume a character different from the quantum of Rs. 220, expressly specified in the lease deed as payable towards the taxes, I am unable to see. Reliance has been placed upon Tej Singh v. Soora Subbarayulu Chetty (1951) 1 M.L.J. 183 : A.I.R. 1951 Mad. 633(1). In that case, the Rent Controller had fixed the fair rent of the premises. On appeal, the appellate authority thought that the payment of the taxes and the amounts spent for repairs by the tenant could not properly be taken into consideration for fixing the fair rent. This view was held to be incorrect in this decision. It was pointed out that in fixing the fair rent, regard could under the Act be had also to the circumstances of the case including any amount paid by the tenant by way of premium or other like sum in addition to rent. The learned Judges did not pronounce finally on the question whether the taxes payable by the tenant under a special contract would fall within the phrase any amount paid by the tenant by way of premiuim. They limited the question before them only to a consideration whether such payment would be one of several circumstances of which account should be taken in fixing the fair rent. I am unable to see anything in this decision which supports the contention of Mr. Thiagarajan that the payment of the taxes, though stipulated for, cannot be regarded as rent.
12. Reference has been made by Mr. Thiagarajan to Halsbury's Laws of England, 3rd Edn., Vol. 23. In paragraph 1194, the learned author lists out payments which are not rent. One of these is:.payments by way of increased rent which the tenant agrees to make subsequently to the demise. A payment to the landlord in respect of rates is not rent where he is entitled by statute to be reimbursed rates recovered from him.
I shall presently refer to the English decisions bearing upon this point. In Phillips v.. Long 63 T.L.R. 127, the landlord had let the premises at a rent the figure of which brought it within the scope of Small Tenants Recovery Act. The tenant paid the rates on the premises until 1943. Subsequently thereto, the local authority directed that the rates should be paid by the owner and not by the occupier. The owner paid the rates and sought to recover it from the tenant. The Stipendiary Magistrates held that taking the rent together with rates, the total amount exceeded, 20 a year and took it out of the scope of the Small Tenants Recovery Act. What was ultimately decided by the King's Bench Division was that by reason of the Rating and Valuation Act, 1925, the owner obtained the right to be reimbursed by the occupier for any rates which he had to pay under that Act, but that did not make the amount so reimbursed part of the rent of the premises, the statutory right to be reimbursed being quite different from his right to claim rent. In that case, in seeking to recover this amount, the landlord sought to distrain. The right to reimbursement, the King's Bench Division held, could not be equated to a right of recovery of rent by way of distraint. This does not appear to be an authority for holding that the rates paid by the tenant can never become part of the rent. On the other hand, the impact of several different enactments one upon the other was considered in this decision as limiting the right of the landlord in the matter of recovery.
13. An English decision referred to by the Supreme Court in Karnani Properties Ltd. v. Augustine : 1SCR20 , may be referred to at some length. In Property Holding Co., Ltd. v. Clark (1948) 1 All E.R. 165 the premises was let for a rent of 110 a year and an additional payment of 30 a year in consideration of certain amenities provided for by the landlord. Following a notice to quit, the tenant became a statutory tenant under the Rent Restrictions Act. Simultaneously, the landlords gave a notice to the tenants raising the rental and sued for arrears of rent. But the County Court held that only 110 was the rent. But the Court of Appeal viewed it differently. Scott, L.J., observed at page 169:
I reject the contention that a covenant to pay cannot be a covenant to pay rent unless the payment is called 'rent' in the lease or agreement. It is the substance that matters, and I am satisfied that in this case the 30 a year was a part of the rent within the meaning of the Rent Restrictions Acts. The total rent, therefore, was 140....
The question of the rates paid by the tenant and its nature were considered in Sidney Trading Co. v. Finsbury B.C. (1953) 1 All E.R. 460. In that case, the tenant had agreed to pay to the landlord for transmission to the appropriate authorities all the existing or future general and water rates, and the question was whether the payment of these rates was rent for the purpose of the relevant enactment. The decision cited earlier Property Holding Co., Ltd. v. Clark (1948) 1 All E.R. 165, was held to lay down authoritatively the test for deciding what is the rent for the purpose of the Act. Lord Goddard observed in Sidney Trading Co. v. Finsbury B.C. (1953) 1 All E.R. 460 :
What is the total monetary payment to be made by the tenant to the landlord? One has not to regard the rent from the common law point of view of something issuing out of land for which a distress could issue... So, here, in substance, the monetary consideration which the tenant agreed to pay for this tenancy--leaving the premium out of the question--is the 5-4 S plus a certain sum for rates. It seems to me on the authority of the two cases which I have mentioned that it matters not whether the payment is for rates; for service, or for the use of furniture. If there is a sum of money which the tenant agrees to pay as a consideration for the tenancy, it is for this purpose a rent.
14. It is, however, contended by Mr. Thiagarajan that dispite the provision in Section 105 of the Transfer of Property Act and the general principle derivable from the decisions, cited above, where the Rent Control Act is in force, the position is different. Reference has been made by the learned Counsel to section. 6 of the Madras Buildings (Lease and Rent Control) Act, 1960, and it is argued that this provision enables the landlord to claim from the tenant the excess of the amounts of taxes and cesses as between the two dates specified in that section, in addition to the rent payable for the building under this Act. It is contended accordingly that the statute itself provides that the landlord can recover the excess of taxes, and if that, is so, that excess cannot be regarded as part of the rent. I am not convinced of the correctness of this argument. It is true that Section 6 provides that where subsequent to the demise of the premises the taxes have increased, such increase not being due to an increase of rent in respect of the building, the statute comes to the rescue of the landlord and enables him to recover that excess from the tenant. But we are concerned here not with a right secured to the landlord under Section 6 of the Act but With the position as it emerges from the agreement between the parties. The case-law that has been referred to earlier deals with such a situation, viz., where by a contract the tenant has agreed to pay the rates, the amount of such rates is necessarily part of the rent, for the payment of the rates is also in consideration of the right of the enjoyment of the premises. Nor am I willing to attach any importance to the marginal note which reads Increase over the rent in certain cases or the expression that the landlord is entitled to claim such excess from the. tenant in addition to the rent as indicating that the excess taxes enjoy a character different from that of rent. Turning to the predecessor Act, Act XXV of 1949, the corresponding Section 5-A of that Act bore the marginal note Increase of rent in certain cases. The somewhat different terminology used in the marginal note in the 1960 Act does not to my mind make such excess anything different from rent. In any event, where by agreement of parties, the tenant undertakes to pay the taxes as well, it is well-settled on the authority of the decisions referred to above that that is part and parcel of the rent.
15. It would necessarily follow that the rent of the premises is in the region of Rs. 419 and odd per month.
16. An argument was advanced; that the rent is in respect of more than one building. The extract from the municipal register has been produced to show that two door numbers have been allotted to these premises. It is also stated that a zinc-sheet-roofed shed has been put up by the tenant itself with regard to the-ownership of which there is dispute and that part of the taxes is referable to this shed. I am called upon by Mr. Thiagarajan to construe that the tenancy is thus in respect of more than one building and if we take each building separately, the rent therefor must necessarily fall below the limit of Rs. 400. I am unable to accept this argument for the following reason. The tenancy started under the original registered agreement of 1935 and was undoubtedly in respect of a single premises only. That the municipality for the purpose of its own has given it more than one door number cannot make the contract of letting a letting in respect of more than one building. That has no relevance to the question under consideration. Apart from that, even as long back as 1948 or 1949, by agreement between the landlord and the tenant, the tenant had been paying a sum of Rs. 1,000 and odd as his contribution towards the taxes for the entire premises. In the case of non-residential buildings, it seems to me that it would be illogical to split up a premises which was the subject-matter of a single letting into different buildings within the meaning of the Act. For instance, in the case of a factory which may consist of administrative building OK other outhouses in addition to the main building, the entire premises would be the subject-matter of single letting and if it is split up into a letting of more than one building, the purpose of letting itself, which is the basis of the contract between the parties, would be destroyed The present position is analogous thereto. I am not prepared, therefore, to agree that more than one building is involved in this case or that the rent of each building would be below Rs. 406.
17. It is the contention of the petitioner that the tax in respect of the shed put up by the tenant is not in fact included in the quantum of tax Which the tenant has been paying and that there has been a separate assessment in the tenant's name for this shed. The dispute with regard to the ownership of the shed is irrelevant in the present context. . Mr. V.K. Thiruvenkatachari for the petitioner called upon the respondent to file an affidavit to sustain his contention that there had been ho separate assessment of the zinc shed or that the landlord had always been paying the; tax in respect of that construction. For the petitioner, it was claimed that it has been paying the tax thereon, independently of the tax on the rest of the property. No such affidavit has been filed and I must take it that the respondent's contention that tenants' tax contribution includes the tax on the zinc shed has failed to be substantiated. It would thus follow that the total amount of monthly rent, taking within the term all the payments made by the tenant in respect of the demised property excluding the zinc shed, exceeds Rs. 400. ,
18. Nextly it was contended that though on the date on which the application for the fixation of the fair rent was filed by the landlord, the building which bore a monthly rental of over Rs. 400 stood outside the scope of the Act Section 30 of the Act has been amended by Act XI of 1964 deleting this exemption in the case of non-residential buildings. It is argued that the Court could take note of the change in the law and apply it as it exists at the present time. I am by no means convinced of the applicability of this general principle in this case. The quest on is whether on the date on which the landlord made the application such application was at all maintainable. If it was not, the Court had no jurisdiction to entertain it as on that day and deal with it. It may be that today after the passing of Act XI of 1964 the landlord could maintain the application. The position. is that there was no right in the landlord to make an application of this kind prior to the passing of Act XI of 1964. Such, right was created by that Act. It should necessarily follow that the petition was not maintainable and should be dismissed.
19. In the result, the writ petition is allowed. In the circumstance of the case, there will be no order as to costs.