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K. Kaliammal and ors. Vs. Athi V. Ramachandran and ors. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtChennai High Court
Decided On
Reported in(1983)2MLJ252
AppellantK. Kaliammal and ors.
RespondentAthi V. Ramachandran and ors.
Cases ReferredChelladurai v. Parametnand Jindel
Excerpt:
- - 3,000. since both the parties are not satisfied with the fair rent fixed by the appellate authority, they have filed these civil revision petitions. we are not satisfied that the value of the land as fixed by the appellate authority needs any revision. we are therefore satisfied that even accepting the discretion exercised by the appellate authority in terms of sub-section (5)(a)of section 4 only a sum of rs. the learned counsel for the tenants made it clear that it will be open to the landlords as has been stated in this lease deed itself to put the said vacant land to any use as they like and for that purpose they will have ingress and egress through the common passage which is available to both parties......we have stated above, the learned advocate-general has filed a statement according to which the cost of site, i.e., 16,464 sq. ft. comes to rs. 1,64,640. the cost of construction after deducting 30% is rs. 91,679. cost of amenities being 25% of the cost of site and cost of construction is rs. 64,079. the total cost to be taken for the purposes of fixation of fair rent in terms of sub-section (4) of section 4 comes to rs. 3,20, 398. calculated on the basis of 12% as return in terms of section 4 (3) of the act the monthly rent comes to rs. 3,20,398. the monthly fair rent for furniture is fixed by the appellate authority in respect of which no argument was advanced before us comes to rs. 200. the total fair rent comes to rs. 3,403.98 as correctly shown in the statement filed by the.....
Judgment:

S. Padmanabhan, J.

1. The Civil Revision Petitions Nos. 2678 and 3066 of 1981 have been filed by the tenants and the landlords respectively against the order passed by the appellate authority (Subordinate Judge, Karur) under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (called the Act) in C.M.A. No. 30 of 1980 fixing fair rent for the tenanted premises. The premises in respect of which fair rent has been fixed is a non-residential building, viz., a theatre in Karur. Originally, the building had been leased to one Kuppuswami Gounder the predecessor-in-interest of the tenants on a rent of Rs. 700 per month for the building and Rs. 300 for furniture, etc. While so, the landlords filed R.C.O.P. No. 26 of 1977 for fixation of fair rent for the premises under Section 4 of the Act. The landlord's claimed that a sum of Rs. 4,620 per month would be fair and reasonable. The tenants stated in their counter-affidavit that a sum of Rs. 1,700 per month would be reasonable rent for the building and Rs. 180 for the furniture. The Rent Controller fixed the fair rent for the building at Rs. 2,065 per month and for the furniture at Rs. 200 and consolidated the amount in a sum of Rs. 2,265. The tenant did not feel aggrieved by the fixation of fair rent by the Rent Controller. However, the landlords filed C.M.A. No. 30 of 1980 before the Appellate Authority (Subordinate Judge, Karur). The Appellate Authority fixed a fair rent for the building at Rs. 3,000. Since both the parties are not satisfied with the fair rent fixed by the Appellate Authority, they have filed these civil revision petitions.

2. These civil revision petitions have been posted for being disposed of by the Bench on account of a conflict of opinion expressed by two learned Judges of this Court on the interpretation to be placed on Section 4(4) of the Act. The principal question) that arises for consideration is about the proper construction to be placed on the said section.

3. Section 4 of the Act deals with the fixation of fair rent. Section 4(1) reads as follows:

(1) The Controller shall on application made by the tenant or the landlord of a building and after holding such enquiry as he thinks fit, fix the fair rent for such building in accordance with the principles set out in the following sub-section.

Section 4(2) reads as follows:

The fair rent for any residential building shall be nine per cent. gross return per annum on the total cost of such building.

Section 4 (3) reads as follows:

The fair rent for any non-residential building shall be twelve per cent gross return per annum on the total cost of such building.

For the above, it is clear that both the landlords and the tenants can apply for the fixation of the fair rent for the building. The measure of the fair rent in respect of a residential building is 9% gross return per annum on the total cost of such building. The measure of fixation of fair rent for a non-residential building shall be 12% gross return per annum on the total cost of such building. Thus far there is no controversy between the parties.

4. Section 4 (4) of the Act which calls for interpretation in these civil revision petitions deals with the mode of computation of the total cost of the building referred to in Section 4 (2) and 4 (3) of the Act. It reads as follows:

The total cost referred to in Sub-section (2) and Sub-section (3) shall consist of the market value of the site in which the building is constructed, the cost of construction of the building and the cost of provision of anyone or more of the amenities specified in Schedule I, as on the date of application for fixation of fair rent:

Provided that while calculating the market value of the site in which the building is constructed, the Controller shall take into account only that portion of the site on which the building is constructed and of a portion up to fifty per cent. thereof of the vacant land, if any, appurtenant to such building the excess portion of the vacant land, being treated as amenity.

(Italics ours). * * * * *

From the above, it is clear that the total cost of construction of a building shall be made up of three ingredients, viz., (1) the cost of the site on which the building is constructed; (2) the cost of construction of the building; (3) the cost of provision of any one or more of the amenities specified in Schedule I as on the date of application for fixation of fair rent. The first proviso deals with the calculation of the market value of the site in which the building is constructed. It stated that in calculating the market value of the site in which the building is constructed the Controller shall take into account two factors, viz., (1) that portion of the site on which the building is constructed and (2) a portion upto 50% thereof of the vacant land, if any appurtenant to such building. There is no difficulty in calculating the extent of the site on which the building is constructed. The question that has to be resolved in these civil revision petitions is what is meant by 'of a portion upto 50% thereof of the vacant land, if any, appurtenant to such building'. The learned Counsel for the tenants Mr. Venkatesan contended that what has to be taken into consideration by the Controller for the purpose of arriving at the market value of the site in which the building is constructed is the actual area of the site on which the building is constructed and 50% of such area from and out of the vacant land. For this contention, the learned Counsel relies upon a decision of Ratnam, J., in Chelladurai v. Parananand Jindal : (1980)2MLJ441 . On the other hand, the learned Advocate-General appearing for the landlords argued that the market value of the site has to be calculated under the proviso by adding together the area of the site on which the building is constructed and 50% of the area of the available vacant land, the other 50% being treated as amenity. The learned Advocate-General relied on the decision of Sathiadev, J., in P.N. Shamsunnissa Begum v. Nanjiah : (1980)2MLJ9 .

5. On a careful reading of Section 4 (4) of the Act and the first proviso thereof, we are unable to agree with the construction sought to be placed on the first proviso to Sub-section (4) of Section 4 by the learned Counsel for the tenants. When Section 4 (4) of the Act states that the total cost of the building referred to in Sub-section (2) and Sub-section (3) shall consist among others of the market value of the site in which the building is constructed, the legislature must be deemed to have used the word 'site' not with reference to the actual area on which the building is constructed but with reference to the actual area on which the building is constructed and also vacant land if any around. The proviso also therefore deals with the calculation of the market value of the site in that sense. So far as the proviso speaks of the portion of the site on which the building is constructed there is no difficulty in construction. In this connection, however, we have to take note of the difference in the language, used both in Sub-section (4) to Section 4 and the proviso viz., the market value of the site in which the building is constructed land that portion of the site on which the building is constructed as found in the proviso. It is therefore clear that the Legislature has used the word 'site' in the main, Section 4 (4) as including not only the actual area on which the superstructure stands, but also the vacant land if any around the superstructure. Viewed in this light, the words 'of a portion upto fifty per cent. thereof of the vacant land if any, appurtenant to such building' can only mean 50% of the vacant land of the site after excluding the site on which the building is constructed. This conclusion is further fortified by the fact that the Legislature has used a comma, after the words 'of a portion upto fifty per cent'. Therefore, the 50% referred to in the proviso can only refer to 50% of the vacant land as contrasted with that portion of the site on which the building is constructed. The word 'thereof' has the meaning of 'of that' 'from that' (vide, Chambers Dictionary Revised Edition). If these words are substituted for the word 'thereof and the proviso is read it will be clear that the 50% is only to be taken from that of the vacant land or out of the vacant land. In fact, both the learned Judges, Sathiadev, J., and Ratnam, J., have taken into account the above dictionary meaning of the word 'thereof'. If we place an: interpretation on the proviso as contended for by the learned Counsel for the tenants, it will result in anomaly. Let us consider a case where the actual area on which a building stands is 1000 sq. ft. and the available vacant land is 490 sq. ft. The total area to be taken into account for the purpose of arriving at the market value of the site in which the building is constructed, according to the interpretation of the counsel for the . tenant, will be 1000 sq. ft. plus 50% of 1000 sq. ft., i.e., 1500 sq. ft. On the other hand, if the construction that is sought to be placed by the learned Advocate-General is accepted the area for the purpose of calculating the market value of the site in which the building is constructed will be 1245 sq. ft., which Will be more favourable for the tenant. But supposing the area on which the building1 is constructed is only 1000 sq. ft. and the area of the vacant land is 2000 sq. ft., then the actual area for the purpose of calculating the market value, on the basis of the contention advanced by the counsel for the tenants will be 1500 sq. ft. In such a case, whatever be the area of the vacant land i.e., whether it is 490 sq. ft. or 2000 sq. ft. the area of the site for the purpose of calculation of the market value will always: remain at 1500 sq. ft. That would not have been the intention of the Legislature . We are therefore of the view that the construction placed by Sathiadev, J., on the proviso to Section 4 (4) of the Act is correct. We are unable to agree with the construction placed on the said sub-section by Ratnam, J. We therefore hold that the computation of the market value of the site under the proviso to Sub-section (4) of Section 4 of the Act should be as follows: The value of the site shall be the sum of (1) the actual area on which the building is constructed, (2) 50% of the vacant land. The other 50% of the vacant land will be treated as an amenity. We therefore upheld the decision of Sathiadev, J., in P.N. Shams Unnissa Begum v. Nanjiah : (1980)2MLJ9 , and overrule the decision of Ratnam, J., in Chelladurai v. Parametnand Jindel ( : (1980)2MLJ441 .

6. Now coming to the merits of the case, there is a dispute with regard to an extent of 8680 sq. ft. According to the tenants, this extent of 8680 sq. ft. was not included, in the premises leased out to the tenants. The learned Counsel for the tenants took us through the lease deeds of 1946, 1953 and 1961. In view of the clear recitals contained in the lease deeds, the learned Advocate-General was compelled to concede and we may say, very fairly and rightly too, that this area of 8680 sq. ft. has to be excluded from the total area of the site. There is no dispute that the total area of the site including this 8680 sq. ft. comes to 31,625. After deducting the extent of 8680 sq. ft. which is the vacant land which is not included in the lease in favour of the tenants, the total area of the site actually leased conies to 22,945 sq. fit. Out of this, it is admitted by both sides that the building occupies 9983 sq. ft. leaving an extent of vacant land of 12,962 sq. ft. On the basis of the calculation arrived at by us, the 50% referred to in the proviso to Section 4 (4) of the Act is 50% of the vacant land, the actual area that has to be taken into consideration for arriving at the market value of the site is 50% of 12,962 sq. ft., vis., 6481 sq. ft. Therefore, the total area of the site for the purpose of the proviso will be 9903 plus 6481 sq. ft. viz., 16,464 sq. ft. The learned Counsel for the tenants does not dispute the extent in the light of the interpretation placed by us on Section 4(4) of the Act.

7. The Rent Controller fixed the value of the land at Rs. 7 per sq. ft. It may be mentioned in this context that the Commissioner at the instance of the tenants had fixed the value at a slab date of Rs. 10 for the front portion, Rs. 9 for the middle portion and Rs. 5 for the rear portion. The landlords filed Exhibits, A-3 and A-6 which are sale deeds Exhibit A-7 which is the guideline fixed by the Tahsildar for the valuation of the property in the locality. The Rent Controller fixed the value of the land at Rs. 7,. However, the Appellate Authority fixed the value of the land at Rs. 10 per sq. ft. The learned Counsel for the tenants contended that the valuation fixed by the Appellate Authority was unreasonable and he should have confirmed the value of the land at Rs. 7 per sq. ft. as fixed by the Rent Controller. The learned Counsel stated that Exhibits A-5 and A-6 could not have been relied upon as they were composite sale deeds for land and superstucture. On the other hand, the learned Advocate-General for the landlords argued that the appellate authority ought to have fixed the value of the land at Rs. 12 per sq. ft. on the basis of Exhibit A-5 sale deed. According to the learned Advocate-General both Exhibits A-5 and A-6 contained separate valuation for the vacant portion of the land. We are not satisfied that the value of the land as fixed by the Appellate Authority needs any revision. In fact, even according to the submission of the learned Advocate-General an area of 234 sq. ft. of vacant land in Exhibit A-6 has been valued only at Rs. 2,340 which works out only at the rate of Rs. 10 per sq. ft. We therefore cannot countenance the claim of the learned Advocate-General for enhancement of the value of the land at Rs. 12 per sq. ft. Similarly, we are not impressed with the argument of the learned Counsel for the tenants that the appellate authority should have adopted the belting system as followed by the Commissioner in his report. In fact, the question, does not arise at all in view of the fact that we have now excluded the area of 8680 sq. ft. in the rear portion. The rest of the area is occupied by the theatre and therefore there is no scope for any valuation on the application of the belting system. We are therefore of the opinion that the valuation fixed for the land by the appellate authority does not call for any interference.

8. Mr. Venkatesan for the tenants then contended that both the Rent Controller and the Appellate Authority were not justified in taking into account 25% towards the cost of the amenity. The learned Counsel argued, that Schedule I to the Act enumerates as many as 17 items of amenities, that all the 17 items are not available in the present case and that second proviso to Section 4 (4) of the Act only stated that the cost of amenities shall not exceed 25% in the case of non- residential building. In the circumstances, the authorities below ought to have considered whether for the amenities available 25% should be taken into account. Admittedly, the Rent Controller had taken into account 25% of the amenities. The tenants did not feel aggrieved by the said order and therefore they did not raise this question before the appellate authority. Even in the memorandum of grounds of revision here the tenants have not raised this question at all. Even otherwise, there is no basis at all for the contention of Mr. Venkatesan. Under; the first proviso of Section 4 (4) the excess portion of the land which has to be treated1 as an amenity in this case is 6481 sq. ft. in view of the interpretation placed by us on the said sub-section. At the rate of Rs. 10 per, sq. ft., the value of this 6481 sq. ft. of land comes to Rs. 64,810. The compound wall which is also an amenity has been valued at Rs. 3,500. The total cost of amenities thus comes to Rs. 68,310. On the other hand, the appellate authority has taken into account only Rs. 64,079 which will come to l|4th of the total cost of the site and the cost of construction of the building. In the circumstances, we overrule the contention of Mr. Venkatesan.

9. The next point to be considered relates; to an arithmetical mistake committed by the appellate authority in applying Sub-section (5)(a) of Section 4 of the Act. Sub-section (5)(a) of Section 4 reads as follows:

The cost of construction of the building including cost of internal water-supply, sanitary and electrical installations shall be determined with due regard to the rates adopted for the purpose of estimation by the Public Works Department of the Government for the area concerned. The Controller may, in appropriate cases allow or disallow an amount not exceeding thirty per cent., of construction having regard to the nature of construction of the building.

The sub-section confers a discretion on the Controller to allow or disallow an amount not exceeding 30% having regard to the nature of the construction. But this allowance or disallowance of 30% can only be on the cost of construction of the building including cost of internal water-supply, sanitary and electrical installations. The allowance of 30% cannot be granted in respect of the total cost consisting of the market value of the site in which the building is constructed, the cost of construction of the building and the cost of provision of any one, or more of the amenities specified in Schedule. I referred to in Sub-section (4) of the Section 4 of the Act. Therefore, the learned Advocate-General is right in his submission that under Section 4(5)(a) of the Act the allowance if granted can only be 30% on the actual cost of construction of the building including cost of internal Water-supply, sanitary and electrical installations. However, there is no dispute that in this case the Appellate Authority has deducted 30% on the total cost of construction within the meaning of Section 4 (4) of the Act, viz., Rs. 3,87,877 and arrived at the said 30% at Rs. 1,16,340. This is obviously not correct. After deducting 30% the cost of construction comes only to Rs. 91,679 as per the statement given to us by the learned Advocate-General. We are therefore satisfied that even accepting the discretion exercised by the appellate authority in terms of Sub-section (5)(a)of Section 4 only a sum of Rs. 91,679, can be taken into account as cost of construction.

10. On the basis of what we have stated above, the learned Advocate-General has filed a statement according to which the cost of site, i.e., 16,464 sq. ft. comes to Rs. 1,64,640. The cost of construction after deducting 30% is Rs. 91,679. Cost of amenities being 25% of the cost of site and cost of construction is Rs. 64,079. The total cost to be taken for the purposes of fixation of fair rent in terms of Sub-section (4) of Section 4 comes to Rs. 3,20, 398. Calculated on the basis of 12% as return in terms of Section 4 (3) of the Act the monthly rent comes to Rs. 3,20,398. The monthly fair rent for furniture is fixed by the Appellate Authority in respect of which no argument was advanced before us comes to Rs. 200. The total fair rent comes to Rs. 3,403.98 as correctly shown in the statement filed by the learned Advocate-General. The order of the Appellate Authority has to be modified inasmuch as it has deducted 30% from the total cost of construction. In modification of the fair rent fixed by the appellate authority, we fix the fair rent at Rs. 3,400 (instead of Rs. 3,403.98) so that the rent may be a round figure. The result is the civil revision petition filed by the tenant is dismissed and the civil revision petition filed by the landlord is allowed, and the fair rent is fixed at Rs. 3,400 composed of Rs. 3,200 for the; tenant premises and Rs. 200 for the furniture. There will, however, (be no order as to costs: in either of the civil revision petitions.

11. Before parting with the case, it is necessary to record the fact that the learned Counsel for the tenants made it clear that the area of 8680 sq. ft. is in the possession of the landlords and that they, the landlords are at present using it and that the tenants do not in any way need the same for their use. The approach to the said vacant land is through a common passage. The learned Counsel for the tenants made it clear that it will be open to the landlords as has been stated in this lease deed itself to put the said vacant land to any use as they like and for that purpose they will have ingress and egress through the common passage which is available to both parties. It is also made clear that the landlords will not use the passage in such a way as to disturb the conduct of the cinema shows.


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