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Rainbow Electric Supply Corporation by Its Proprietor Heerachand Shiyal Vs. S.V. Chenchuramiah and anr. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtChennai High Court
Decided On
Reported in(1972)2MLJ446
AppellantRainbow Electric Supply Corporation by Its Proprietor Heerachand Shiyal
RespondentS.V. Chenchuramiah and anr.
Cases ReferredPresident and Trustees S. Venkatarangam and Ors. v. Sadhana Aushadhalaya
Excerpt:
- .....not belong to him. the courts below have accepted the landlords' case and held that the second floor construction should not be taken into account in arriving at the site value. i accept the finding of the appellate judge and hold that the apportionment of the site value should be only confined only to tie ground floor and the first floor.17. regarding the amenities the act provides the maximum of 25 per cent, of the cost of constri ction and the courts below have held taking it into account various factors that 20 per cent, should be allowed. i cannot say that the value of the amenities fixed at 20 per cent is high.18. the last contention of the tenant is that the return of g per cent, of the cost of construction is too high and that it ought not to be fixed at no more than 6 per.....
Judgment:
ORDER

V.V. Raghavan, J.

1. 'In view of the Judgment of the Supreme Court in K.C. Mambiar v. IVth Judge of Court of Small Causes, Madras : [1970]1SCR906 striking down, Rule 12 of the Rules, made under Section 34, the finding of the Appellate Authority on the question, of costs of construction is set aside and the appellate authority will take this on his file and submit a finding on the cost of construction. The Appellate Authority is entitled to take fresh evidence adduced by the parties. Time for submission of finding four months'. In pursuance of the aforesaid order of the High Court the IV Judge, of the Court of Small Causes submitted the following finding:

2. Finding submitted in obedience to-the order of Hon'ble High Court in. C.R.Ps. Nos. 1606 and 2206 of 1968 dated 27th November, 1970. The Hon'ble High Court has observed that in. view of the judgment of the Supreme Court striking down Rule 12 of the Rules framed under the Madras Building (Lease and Rent Control) Act, the finding already submitted by this appellate Court in H.R.As. No. 806 of 1965 and 833 of 1965 is set aside and the Hon'ble High Court had directed this Appellate Court to submit a finding on the cost of construction, after taking fresh evidence that may be adduced by the parties. In obedience to the direction of the High Court further enquiry was held and the parties have examined P.Ws. 2 and 3 and R.Ws. 3 and 4 and have marked Exhibits P-3 to P-6 and R-26. The learned Counsel appearing on either side had also submitted arguments.

3. The point for consideration is what is the cost of construction of the premises occupied by the tenant?

4. The Point : Section 4, Sub-clause 3(a) of the Rent Control Act indicates the fair rent for any non-residential building and one of the constituents to be considered for arriving at the fair rent under the said section is the cost of construction of the non-residential building. This should necessarily mean after the striking down of Rule 12 the cost of construction of the building at the particular time when the building was constructed. P.W. 2 had admitted that he is just 49 years old and therefore, he could not have had any personal knowledge about the actual cost of materials at the time when this building had been constructed. According to P.W. 2 this building should be 5o years old. Therefore, he would state that he had taken the assistance of another experienced contractor to assess the value of the materials and works at the period when the petition-premises was built It is, therefore, clear that his evidence is not based upon his own knowledge but is based upon the assistance rendered by some other person. Admittedly P.W. 2 had not worked out the value of the materials. He had only assumed the depth of the foundation and the materials used for the construction. He had also admitted that he has not given measurements for the windows and doors in the premises. Therefore, the estimate prepared by him and marked as Exhibit P-3 cannot give any guidance and it cannot be accepted.

5. P.W. 3 who claims to have given the assistance to P.W. 2 in the preparation of the estimate, Exhibit P-3, would state that the cost of construction 50 years ago for the type of building involved in the petition premises will be Rs. 3 per sq. ft. He has not obtained any record or vouchers to show the prices of building material 50 years ago. Admittedly he has not got so much of work as to earn assesable income. He had given only the rates to P.W. 2. As has been already observed when there are no documents or vouchers to indicate the rate of the materials 50 years back the rate furnished by P.W. 3 cannot be accepted as providing a safe guidance and, therefore, the estimate, Exhibit P-3, prepared on the assistance given by P.W. 3 cannot be accepted. One other circumstance will also make the evidence of P.Ws. 2 and 3 un^ acceptable and that is this:

6. P.W. 2 has deposed that he did not find any new construction in the petition-premises. He would deny the suggestion that a portion of the premises was recently constructed. Similarly P.W. 2 has indicated that the entire building is 50-years old. This version of P.Ws. 2 and 3 is opposed to the evidence already recorded and is also opposed to the finding recorded by my predecessor. R.W. 3, a qualified Engineer would assert that he saw new constructions in the petition-premises. He would state that a portion of the building is 20 years old and another portion in the occupation of the tenant is 50 years old. This evidence of R.W. 3. is consistent with the documents relating to the petition-premises. The tenant had occupied the premises only in the year 1952 and, therefore, he is not aware as to when the premises was actually built. Exhibit R. 25 is the copy of the plaint is O.S. No. 3010 of 1910. In that plaint the building is describe as having a tiled roofing. At present the building is proved to be a terraced one. Therefore, this terraced building should have come into existence after the filing of the plaint in the year 1910 in O.S. No. 3010 of 1910. Exhibits R. 15 and R. 16 would lend support to the case of the landlords that there were additions and alterations to the building. Exhibit R. 17 makes it clear that the tenant who filed H.R.G. for fixation of fair rent with reference to the petition-premises admitted the borrowing of Rs. 4,500 by the respondent in those proceedings for the purpose of putting up construction in the backyard, upstairs and downstairs. According to the evidence in this proceedings and indicated in the order Exhibit R-17 the owners of the building asserted that they had spent nearly Rs. 22,000 for the construction. Therefore, it is clear that there should have been new addition to the premises sometime in 1946 and 1947. Therefore, the evidence of P.Ws. 2 and 3 regarding the estimate as adumbrated in Exhibit P-3 will have to be rejected.

7. The evidenciary value of Exhibit P-3, estimate dwindles down by reason of the fact that the girders and wooden beams in the building have not been taken into account and Exhibit P-3 does not make a distinction between old construction and new construction in the premises. Exhibit P-4 is the settlement deed dated 24th January, 1918 and according to R.W. 24, this Exhibit P-4 deals with petition-property. In Exhibit P-4, the value of the petition-premises in the year 1918 is put at Rs. 20,000. Exhibit P-5 is the encumbrance certificate relating to the petition-premises. That indicates that on 8th June, 1938 a mortgage over this property was created to the extent of Rs. 20,000. Exhibit P-6 shows that on the foot of mortgage over the petition-property the Egmore Benefit Society had advanced a sum of Rs. 76,664. These documents, the genuineness of which cannot be challenged, demonstrate that the value of the building as furnished by P.W. 2 in Exhibit P-3 is ridiculously low and cannot be accepted.

8. P.W. 2 has stated that the tenant had occupied 2087 square feet in the ground floor and 825 square feet in the first floor. This evidence regarding the area occupied by the tenant is not based upon actual measurements taken by P.W. 2. P.W. 2 himself has admitted that he had not taken the measurements of the windows and doors. He does not say that he actually measured the area occupied by the tenant. P.W. 3 does not whisper a word that the area occupied by the tenant was actually measured. Even the tenant had indicated that the plinth area occupied by the tenant in the ground floor is 2120 square feet. The landlords have put it as 2207 square feet. In 1197 of 1964 the landlords have given the plinth area of the ground floor occupied by the tenant as 2120 square feet. R.W. 1 who actually measured the plinth area in the occupation of the tenant had deposed that he had noted the measurements in Exhibit R-9 book, and the plinth area occupied by the tenant in the ground floor is 2207 sq. ft. It is not in dispute that the area in the occupation of the tenant in the first floor is 950 sq. ft. Contrary to these facts proved by evidence and the pleadings P.W. 2 would put the plinth area of the ground floor as 2087 sq. ft. and the plinth area in the first floor as 825 sq. ft. That is yet another circumstance to reject the value of the construction furnished by P.Ws. 2 and 3 in Exhibit P-3.

9. The landlords have examined R.W. 3. He had prepared the report, Exhibit R-26 giving the value of the property. It is his evidence that he had taken into account the value of the materials used for the construction of the petition-premises and had also taken the age of the building; one portion 50 years old and another portion about 20 years old. It is indisputable that this building has got to be put as Glass I and this is also spoken to by R.W. 3. He has taken into consideration the girders and wooden beams used for the construction of the premises in assessing its value. He has made it clear that he had collected the data regarding the rates of materials from the suppliers. R.W. 3 has taken pains to indicate that First Class Burma teak wood had been used in the premises. Therefore, the documents, Exhibits P-4 to P-6 and the evidence of R.W. 3 will establish that the valuation of the premises as furnished by P.W. 2 and 3 in Exhibit P. 3 is unacceptable but the valuation furnished by R.W. 3 in Exhibit R-26 is acceptable.

10. I, therefore, come to the conclusion that the value of the petition-premises is proved to be Rs. 32,53-20.

11. These petitions coming on for further hearing on Friday, the 7th day of January, 1972 after receipt of the finding the Court made the following Order:

12. In pursuance of the order passed by me in the above civil revision petitions calling upon the Court of Small Causes to record a finding on the cost of construction, the learned Fourth Judge of the Court of Small Causes has submitted a finding that the value of the petition-premises is Rs. 32,534.20. I accept the finding. The Counsel for the respondent in C.R.P. No. 1606 of 1968, will file a memo. calculating the rate of rent on the above-said basis by 13th January, 1972. Adjourned to 13th January, 1972.

13. These petitions coming on for further hearing after receipt of the memo, of calculation of fair rent, on Monday the 24th day of January, 1972 and having stood over for consideration till this day the Court delivered the following Judgment:

14. The petitioner in C.R.P. No. 1606 of 1968 is the tenant and the respondents therein are the landlords. The tenant filed H.R.C. No. 492 of 1965 under Section 4 of Madras Act (XVIII of 1960) for fixation of fair rent in respect of premises No. 217, Govindappa Naicken Street, George Town, Madras, on the ground that thy existing rent was excessive. The Rent Controller fixed the fair rent of Rs. 542 per mensem. The tenant filed H.R.A. No. 806 of 1965 to the Court of Small Causes, Madras, and the appellate judge confirmed the order of the Rent Controller. Against the said decision C.R.P. No. 1606 of 1968 was filed by the tenant, while the landlords filed C.R.P. No. 2206 of 1968 objecting to the low rent fixed by the Courts below. The above civil revision petitions came up for hearing on 27th November, 1970. By that time the Supreme Court in K.C. Nambiar v. The IV Judge of Court of Small Causes, Madras : [1970]1SCR906 , had struck down Rule 12 of the Rules made under Section 34 of the Madras Buildings (Lease and Rent Control) Act, 1960. As a result of the above decision the rent for the premises had to be fixed afresh. I, therefore, set aside the order of the appellate authority and remitted the matter back to him to record a finding on the cost of the construction of the premises with a view to fix the fair rent for the premises in question. The appellate authority has recorded a finding valuing the total cost of construction of the premises at Rs. 32,534.20. When the matter came up before me on 7th January, 1972, I accepted the finding and called upon the Counsel to file a memo, calculating the rent on the above basis. The learned Counsel for the landlords has furnished the memo, of calculation of fair rent on the basis of which the fair rent of the premises is Rs. 539.45. The memo, of calculation as given by the learned Counsel for the landlords is as follows:

Rs. nP.Old portion in the ground floor built in 1910 (50 years priorto date of petition as determined by the lower Courts) .. 7,017 04New portion in the ground floor built in 1946 (20 years ago prior to date of petition as determined by the lower Courts) .. 16,529 61First floor built in 1910 (50 years prior to date of petition as determined by the lower Courts) .. 8.987 55Total cost of construction being the finding of the appellate Court on remand as accepted by this Hon'ble Court as per its order, dated 3rd January, 1972 .. 32,534 20Amenities on the cost of construction at 20% as determined by the Court below .. 6,506 84Value of the site as determined by the Courts below .. 32,886 00TOTAL .. 71,927 04Return at 9% as determined by Courts below .. 6,473 43Rate of rent per month .. 539 45Fair rent of the premises per month Rs. 539 45.

15. The Counsel for the tenant objected to the valuation given above on the following grounds:

(1) The value of the amenities at 20 per cent, of the cost of construction is too high;

(2) The value of the site at Rs. 32,886 is too high, as it fails to take into account the existence of a second floor ; and

(3) The return of 9 per cent, on the cost of construction is too high and that the return can be not mote than 6 per cent.

The learned Counsel for the landlord raises the following contentions:

(1) The courtyard portion inside the building has not been taken into account in arriving at the plinth area and the area of the site;

(2) The land value ought to have been fixed at one lakh of rupees per ground and not Rs. 50,000 per ground;

(3) The cost of electric installation, electric motor pump and other fittings should have been included in the cost of construction of the building; and

(4) In arriving at the land value of the first floor consisting of two storeys, the Courts below erred in distributing the market value proportionately in accordance with two storeys.

16. The extent of the ground floor is 2207 sq. feet while in the first floor, the built up area, is 950 sq. feet. Though the building in question is partly residential and partly non-residential, the Courts below have found that it is predominantly non-residential and we will have to proceed on this basis. Ramaprasada Rao, J., in S. Attendrooloo Chetty's Charities by its President and Trustee Section Venkatarangam and Ors. v. Saddana Aushadhalaya by its proprietor Naresh Chandra Ghosh (1968) 81 L.W. 196, held that fixation of fair rent for the site value in an application under Section 4 of the Madras Buildings (Lease and Rent Control) Act, 1961, in the case of buildings having more than one floor, ought to be one of apportionment in accordance with the number of storeys. The learned Judge held that if there are more than two storeys the site Value has to be proportionally distributed in accordance with the number of storeys in the buildings. The question in the present case is whether there is a second storey in the building in question. The learned Counsel for the tenant urges that in the second floor a structure with asbestos cement roofing is in existence and the landlord is deriving rent therefrom and the contention is that the Court has to apportion the site Value amongst the ground floor, first floor and the second floor. The landlord's reply to this contention is that the structure in the second floor does not belong to him. The Courts below have accepted the landlords' case and held that the second floor construction should not be taken into account in arriving at the site value. I accept the finding of the appellate Judge and hold that the apportionment of the site value should be only confined only to tie ground floor and the first floor.

17. Regarding the amenities the Act provides the maximum of 25 per cent, of the cost of constri ction and the Courts below have held taking it into account various factors that 20 per cent, should be allowed. I cannot say that the value of the amenities fixed at 20 per cent is high.

18. The last contention of the tenant is that the return of g per cent, of the cost of construction is too high and that it ought not to be fixed at no more than 6 per cent. There is no substance in this contention. As various companies borrow at more than 9 per cent on good security, the fixation, of g per cent, return in arriving at the rental value cannot be said to be too high. In the circumstances all the contentions put forward by the tenant fail.

19. On the first question in C.R.P. No. 2206 of 1968, there is no material on Which the contention could be put forward and the Courts below rightly negatived the plea of the landlords. On the question of fixation, of land value the landlords have not furnished materials to substantiate their claim that the value of a ground is one lakh of rupees in that locality. On the other hand, on the materials placed, the Courts below have rightly fixed the market value at Rs. 50,000 per ground. On the third question viz., the inclusion of cost of electric installation etc., in the absence of materials the Courts below rightly rejected the landlords' contentions. On the last question it is admitted that there is a ground floor and a first floor. In the circumstances the. Courts below rightly applied the judgment Section Attendrooloo Chetty's Charities by its President and Trustees S. Venkatarangam and Ors. v. Sadhana Aushadhalaya by its proprietor Naresh Chandra Ghosh (1968) 81 L.W. 196, referred to above and distributed the market value arrived at on the basis of the existence of the ground floor and the first floor. The fair rent of the premises is worked out on the basis of the finding recorded is Rs. 539-45.

20. In the result subject to the above modification the revision petitions filed by both the tenant and the landlord fail and they are accordingly dismissed. There will be no order as to costs.


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