1. This Rule is directed against an order, dated 14-9-1951, passed by Sri N. Banerjee, Additional Subordinate Judge of Alipore, whereby he affirmed an order passed on 6-1-1951, by the Rent Controller, Calcutta, Thepetitioner before us is the landlord of the premisesconcerned namely, the Hind Estate Limited.
2. It appears that the petitioner holds a lease for 99 years in respect of Premises No. 220/1, Lower Circular Road, and certain other premises. That lease is dated 30-12-1948. The opposite party is admittedly a tenant in respect of one shop room in Premises no. 220/1, Lower Circular Road, and it is to. the fixation of the standard rent for thatone shop room that the present Rule relates.
3. The application for the fixation of a standard rent was made by the tenant opposite partyon 27-10-1950. In para. 4 of that application it wasstated that the shop room was a small one, measuring 15' 10' by 8' and tbat the rent in December 1941, was about RS. 20 only. The current rent, however, that was being paid by the tenant wasRs. 54-4-0 and the complaint made by the tenantwas that that rent was exorbitant, compared with the rent with regard to similar premises prevailing in the locality.
4. In the written statement filed on behalf of the landlord it was denied that the rent was exorbitant, but nothing one way or the other was said in respect of the allegation that the premises, namely, the shop room concerned, had been tenanted in December, 1941, and had then borne a rent of about RS. 20 only. In fact, the allegation appears to have been overlooked altogether evenby the authorities below.
5. The Rent Controller obviously treated thecase as one wbere either the premises had not been let out in December, 1941, at all or where the rent borne in December, 1941, could not be ascertained. He, therefore, proceeded to ascertain what the prevailing rent was and for that purpose appears to have relied entirely on a report submitted by an Inspector which contained references to rentssaid to be paid in respect of other similar premises in the locality. He considered the rates reported by the Inspector between which, however, therewas a wide divergence and he solved the problem by striking a mean between those rates. Thefigure adopted by him was RS. 25. Having doneso, be took the nest step of adding 10 per cent to Rs. 25 and reached the figure of Rs. 27-8-0.
6. The Rent Controller then turned his attention to para. 4 of Schedule A to the West Bengal Premises Rent Control Act of 1950 and prefaced hisdiscussion of that part of the case with the remark that the rent in the case before him 'should be assessed under Schedule 4 of para. 5 inasmuch as the petitioner is the sub-tenant of the opposite party who is the tenant of the first degree.' Proceeding to work out the rent in accordance with para. 4, the Rent Controller first determined the standard rent payable by tbe petitioner in respect of the shop room sub-let to the opposite party to be its. 27-8-0. To that he added a further sis and a quarter per cent allowable under para. 4 and thus reached the figure of as. 29-3-6. In the end he declared that the standard rent of the tenancy inquestion would be Rs. 29-3-6 with effect from, November, 1950.
7. It is not at all clear what process of reasoning the Rent Controller actually applied in reaching the result which he arrived at. As I have already indicated, in tbe earlier part of his order he was fixing the rent by reference to the rent prevailing in tbe locality. In the latter part of the order be seems to have treated the case as one where all that was necessary to do was to ascertain the standard rent payable by the tenant of the first degree and then to carry out certain mathematical operations. If the rent payable by the opposite party fell to be determined under para. 4 of Schedule A, it is difficult to see for what purpose the Rent Controller indulged in all that enquiry about the prevailing rents.
8. The most charitable construction that one can place on the order of the Rent Controller ia that as, in ascertaining the prevailing rent he was proceeding more or less on guess work, be allowed the petitioner the maximum whicb, according to him, was allowable under para. 4. If that was what he did, he really determined the rent payable by the opposite party under para. 4 of Schedule A.
9. The landlord did not accept the order of the Rent Controller and appealed. The learned Additional Subordinate Judge upheld the order of the learned Rent Controller and observed that after having found that the basic rent payable for the disputed shop room would be Rs. 25 per month, the Rent Controller had 'fixed the standard rent at Rs. 29-3-6 per month, allowing the increases on the basic rent at the rates admissible under the law.' Since the learned Judge was referring to the additions made by the Rent Controller to Rs. 25 and also saying that those additions had been made at rates admissible under the law, it is clear that he approved of the application by the Rent Controller of para. 4 of Schedule A and also approved of the manner in which the paragraph had been applied.
10. Three points were urged before us in support of the present Rule. It was contended in the first instance that the opposite party having gone to the Rent Controller with the specific allegation that the premises were tenanted in 1941 and having further taken it upon himself to state the amount of rent borne by the premises in that year, although he gave only an approximate figure, but not having led any evidence to establish what the actual rent paid in 1941 had been, his application should have been dismissed straightway.
11. It was contended in the second place that in so far as the Rent Controller had relied upon the Inspector's report as regards the rent said to be paid in respect of certain other premises, he had acted on evidence inadmissible in law.
12. The third contention was that the Rent Controller and also the learned Judge had been wholly in error in applying para. 4 of Schedule A atall, inasmuch as the petitioner's lease was a lease for 99 years and therefore outside the Act by reason of the provisions of Section 5. It was urged that if, as Section 5 provided, nothing in the Act applied to a lease of this character, there could not possibly be a standard rent payable by the petitioner within the meaning of para. 4 of Schedule A and consequently, that paragraph could not be applied to the present case at all.
13. In my opinion, the first two grounds urged on behalf of the petitioner are well founded, and it is not necessary to decide finally the third point raised.
14. It is true that the petitioner did not definitely traverse the allegation made in the application that the premises concerned were tenanted in 1941 and had borne a rent of about Rs. 20 at that time. But if such silence was to be construed as an admission at all, the fact admitted would be that there was a tenancy in December 1941, and that the rent was about Rs. 20 as alleged. The actual rent would still have to be proved and found. But quite apart from that, it seems to me that since the tenant came to the Rent Controller with the page that the premises had been tenanted in December, 1041, the duty of the Eent Controller was clearly to try to ascertain first what the rent paid in respect of the shop room iu 1941 was f, in fact, it had been tenanted. The Rent Control Act prescribes a specific method for fixing the standard rent in cases where the premises were let out in December, 1941. If the rent then paid is ascertainable, the standard rent has to he worked out in a particular way. If such rent cannot be ascertained, then only it is permissible under Section 9 (2) to determine approximately the rent at which in reasonable probability the premises were let out on that date. It is noticeable that even Section 9 (2) does not speak of ascertaining the prevailing rent at the date of the application but speaks of ascertaining the rent which might in reasonable probability be payable for the promises in December 1941. But the point which requires to be stressed is that the structure of the application of the opposite party having been what it was, the Rent Controller had no jurisdiction under the Act at all to proceed straightway to determine what the prevailing rent was till he had investigated whether the allegation of the tenant that the premises had been let out in 1041 was true and if it was true, whether it was possible to ascertain what the rent paid in 1941 had been. Till he disposed of that part of the case in accordance with the law, he had no power whatsoever to digress to any other method of fixing the standard rent. In my opinion, the whole approach of the Rent Controller and, therefore, also the learned Subordinate Judge was mistaken and the case was not properly investigated or tried at all.
15. Equally sound, in my view, is the second ground taken. As I have already stated, the Rent Controller acted entirely on two reports submittedby the Inspector. In those reports he made references to the enquiries which he had made and the rent which he found was payable in respect off certain other premises. That information he could have collected only by enquiries made from the tenants of those premises or of other parties, but in any event by, in effect, taking evidence. This Court has had previous occasion to draw the attention of the Rent Control authorities to the very limited scope of Section 31 of the Act. That section by Sub-section l (a) does no more than empower the Rent Controller to authorise any officer subordinate to him to enter and inspect any premises at any time before sun rise and sun set. The provision can only mean that, if authorised by the Rent Controller, the Inspector may enter and inspect any premises that he may have been authorised to enter and inspect. I would concede, that after making such entry and inspection, he would be entitled to report to the Rent Controler particulars about the premises so entered, and inspected, such as their measurements or the condition, in which they are in other words, the physical peculiarities of the premises.
But the section certainly does not empower the Controller to authorise the Inspector to exercises judicial functions and take evidence from parties, far less does it authorise the Controller to act on such evidence of the second degree collected by the Inspector. It is true that Sub-section (2) refers to the Controller's power to summon and enforce then attendance of witnesses in the manner laid down in the Civil Procedure Code. But the section, it seems to me, is limited to the method and manner of compelling the attendance of witnesses before the Controller himself. In any event, the question whether the Inspector can examine any witness, if specially authorised in that behalf by the Controller by way of commissioning him to do so need be considered in this case, inasmuch as there is no order passed by the Controller so authorising the Inspector. In the present case, the Inspector acted merely under an authorisation to inspect and it is at least clear that under such authorisation he had no jurisdiction whatsoever to examine witnesses, nor had the Controller any authority in law to act upon the information so collected by the Rent Controller. It thus follows that the materials on which the Rent Controller acted were unauthorised by law and inadmissible in evidence and since the whole order is based upon those materials, the order cannot possibly stand.
16. Proceeding now to the third ground, it presents a question of some difficulty as to what Section 5 of the Act really means. As a matter of language it certainly says that nothing in the Act shall apply to a lease entered into after 1-12.1941, for a period of not leas than 15 years. A restricted construction of that language would be that the scope of the section is limited to excluding the operation of the Act as between the lessee under such a lease and his landlord. On the other hand,the language used by the Legislature which, as I have already stated, 'nothing in this Act shall apply' is absolute and it is at least arguable that nothing contained in the Rent Control Act shall be applicable to a non-terminable lease for more than 15 years, granted after December 1941, for any purpose whatsoever. If the latter view be the true view, it would necessarily follow that there cannot possibly be any standard rent payable by a tenant who holds under a lease executed after 1-12-1941 and a lease for a period of not less than 15 years. Standard rent is a creature of the Rent Control Act and if nothing in the Act applies to such a lease, it is perfectly clear that in respect of such a lease, there cannot be a standard rent at all. The effect of that view under para. 4 of Schedule A would be that in cases where certain premises have been sub-let, but the tenant who had sub-let them holds under a lease for more than 15 years taken after 1-32-1941, the para would not be applicable at all. If so, then in such cases if the sub-tenant applied for the fixation of the standard rent, it would not be possible to extend to him the benefit of the para. In other words, the effect of the view would be to establish that there is a lacuna in the Act leaving the cases where a subtenant holds under a tenant who himself holds under a lease for more than 15 years taken after 1-12-1041 Unprovided for, so far as the purposes of para. 4 are concerned'.
17. As, however, this question would not become relevant till the stage of fixing the actual standard rent was reached and since in the present case the very initial approach of the authorities below was mistaken, I do not consider it necessary to decide in advance what the true view of Section 5, read with Section 4 of Schedule A would be. This much, however, appears to bo clear that Para. 4 of Schedule A does not, by itself, prescribe the method of determining the actual standard rent payable by a sub-tenant. It only states the maximum limit beyond which the standard rent fixed for a subtenant cannot be allowed to go, but the standard rent of such sub-tenant has itself to be determined first by reference to other provisions of Section 9 and of the Schedule. Even as regards tbat aspect of para. 4 of Schedule A, the Kent Controller, and with him the learned Judge, seem to have gone wrong, inasmuch as the Rent Controller at least, so far as the language used by him is concerned, appears to have fixed tiie standard rent under para. 4 itself and the learned Judge approved of that method.
18. In my view, to apply para. 4 as if it prescribes the operations to be carried out for the purpose of determining the actual standard rent is entirely erroneous and at least to that extent I would accept the third ground urged by the petitioner as well. Bub as I have said, it is not necessary to decide and we are not deciding what the true view of Section 5 is and what the effect of the correct view on para. 4 of Schedule would be.
19. For the reasons given above, the orders. complained of cannot be upheld. The Rule is accordingly made absolute. The order of the learned Additional Subordinate Judge and the Rent Controller are both set aside and the case is sent. back to the Rent Controller for decision in accordance with law.
20. The petitioner will have his costs of this Rule which we assess at two gold mohurs.
21. This case raises an important point as to the principles -which should determine the approach by the Rent Controller, in computation of the 'standard rent' in respect of non-residential premises. The facts relating to this case are fairly simple. The premises which is the subject matter of the application is a portion of premises NOS. 220/1, Lower Circular Road, which appears to be a huge building on Lower Circular Road and which has a number of tenants occupying different suites. The opposite party who is a minor occupies a road-side ground floor-garage on the north western corner of the building which is used for business purposes. The previous rent of the shop room was Rs. 50 per month which was subsequently raised to Rs. 54-4-0. The premises belongs to one Md. Amin and the petitioner Hind Estate Ltd., hold this property and several other properties under a lease for 99 years. The opposite party Ansar Ahmad through his guardian and nest friend Md. Ismail, made an application on 27-10-1950 praying for the standardisation of the rent. He also prayed that an inspection be held of the premises. In the application it was stated that the shop room was a small one measuring; 15'-10' x 8' and its rent in December 1941 was. about Rs. 20 only.
In the written statement filed on behalf of the Hind Estate Ltd. this allegation about the rent in December 1941 was note expressly traversed. All that was said was that the rent was not at all exorbitant but was, at all material times, and still was, unduly low, nominal, unfair, unjust and unreasonable. The premises was then inspected.. It was inspected by what are called 'Inspectors' appointed by the Rent Controller and according to the report dated 27th November there was a. similar garage in the vicinity yielding a rent of Rs. 56-4-0 per month. The Inspector admitted that the leasehold could not be measured as the other tenants refused to give access. It appears that there is a second report a month thereafter which states that there was another shop room in. no. 50B Theatre Road situated nearby, occupied for thirty years afe a rent of Rs. 18 per month. Now upon those two reports and on further evidence the Rent Controller arrived at his findings and ascertained the standard rent to be Rs. 29-3-6-with effect from November 1950. The method by which he arrived at this figure is somewhat surprising. He first of all refers to these two tenants in the vicinity, one paying Rs. 56-4-0 and the otherpaying Rs. 18 and correctly comes to the conclusion that it is impossible to come to the conclusion that there was any parity in the rent prevailing in the locality. He then says that the 'rent', meaning undoubtedly ''the standard rent'', should be assessed under Schedule 'A' para. 4 of the Act inasmuch as the petitioner was a sub-tenant. As I shall presently show, the learned Rent Controller started where he should have finishedand that para. 4 of Schedule 'A' is not the relevant rule for assessment of the standard rent but only prescribes a limit. He then notices the lack of parity in the rent of the locality and says that the most reasonable thing to do was to take the 'average'. I am at a loss to understand as to how he calculates the average; whether it is the mean of the two figures he had before him orwhether it involved any calculation of the other rentals in the premises. I am also mystified as to how he could work out a proportion because hisown Inspector said that it was impossible to measure any part of the leasehold premises, the tenants having refused to allow him to do so. However by some method of calculation he came to the average of Rs. 25, as he says 'in round number'. Then he says that under Schedule 'A', para. 3, Sub-section (b) the landlord was entitled to 10 p. c. over this and then ultimately he came to the conclusion that the reasonable standard rent payable by the opposite party (meaning the Hind Estate Ltd.) for the petitioner's portion of the tenancy should be in his opinion Rs. 27-8-0. In other words, relying on the two figures above named he calculated the standard rent of the lessee and by adding thereto six quarter per cent, arrived at the figure Rs. 29-3-6 being the standard rent payable by the opposite party.
This is an entirely erroneous method of calculation. The relevant section is Section 9, West Bengal Premises Rent Control (Temporary Provisions) Act, read with sch 'A'. Section 9 (l) (a) refers us to Schedule 'A'. Schedule 'A' consists of four rules. Rule l gives us tbe definition of 'basic rent', firstly where rent has been fixed and secondly where it has not been so fixed. Rule 2 refers to the ascertainment of standard rent of residential premises by adding a specific sum to the basic rent. Rule 3 gives the method of the calculation of standard rent of non-residential premises. Rule 3 states that where premises have been sublet the standard rent of the sub-tenant should not exceed by six quarter percent, the standard rent or a proportionate part thereof which might be taken as reasonably payable by the tenant who sublets the premises according as the premises are sublet in whole or in part and where because of the proviso to Section 3, the tenant had no standard rent under the Act, theexcess mentioned above should be with referenceto the rent payable by the tenant. Therefore where it is possible to ascertain tbe rent which was payable on 1-12-1941 then the basic rent ought to be determined as laid down in Rule 1 (b) of Schedule 'A'. Inthis particular case, the petitioner before the Rent Controller had stated that the property was let out in December 1941 and this was not denied. Therefore there is no valid reason to ignore the provisions of Rule l (b). In specific cases it may so happen that it will be very difficult to obtain sufficient evidence for determining the exact rent payable on 1-12-1941 but that contingency again is provided for in Section 9 (2). Finally, it is not possible at all to determine the rent in December 1941 and if the case is covered by no other section of the Act then under Section 9 (l) (g) the standard rent should be determined at the rate which is fair and reasonable. From this it will at once appear that the Rent Controller made entirely erroneous approach to the question. First of all he wholly ignored the question as to what was the rent in December 1941. Secondly, he attempted to assess the standard rent by the help of Schedule 'A', RULE 4, and next he was wholly in error in the method he adopted in assessing that rent.
This is not the way in which the standard rent should be calculated. Rule 4 of Schedule 'A' is there to prevent trafficking in rents and lays down a ceiling over which the property cannot be sublet. But it is of no help in assessing or ascertaining the standard rent. In reading the order of the Rent Controller and the learned Subordinate Judge it ia very difficult to discover why rent in December 1941 is never sought to be determined. It was suggested by the learned advocate that the respondent had mentioned the sum 'of about Rs. 20' but this was his surmise and therefore the Courts did not take any notice of it. But this is scarcely a satisfactory explanation. There is nothing to show whether this was his surmise or not and the Courts below did not at all refer to this aspect of the question. It is clear therefore that the method of computation adopted is wrong and the result arrived at is erroneous and cannot be supported.
22. The next point is as to the evidence which has been utilised for arriving at the standard rent. Our attention has been drawn to Section 31 and the rules framed under the Act to support the action of the Courts below in relying on the reports of the Inspectors. But Section 31 does not empower any Inspector to take evidence about the rent paid in premises other than the one in question. According to the report of the Inspector he came to hear in one case about the rent paid and in the other case saw the rent bill. The Inspector was not called to give evidence nor were the rent bills produced nor was the person who gave the information to the Inspector called. Under those circumstances the Rent Controller clearly based his finding on inadmissible evidence.
23. The 'standard rent' as fixed can therefore not be supported. I agree with the order made by my Lord.