Surajmal Mangilal v. Legal heirs of deceased Kanhaiyalal Agarwal
2009-12-23
BROJENDRA PRASAD KATAKEY, RANJAN GOGOI
body2009
DigiLaw.ai
JUDGMENT Ranjan Gogoi, J. 1. The instant proceeding has been registered on the basis of an application filed under Section 227 of the Constitution by the defendant-tenant against the determination of fair rent, at the instance of the landlord, and giving effect thereto from the date of filing of the application. Initially, the determination of fair rent and effect thereto from the date of filing of the application by the landlord was made by the learned Civil Judge, Junior Division No. 1, Dhubri of the order dated 25.4.2000 passed in Misc. (J) Case No. 19/1003. On appeal by the tenant, the said order has been confirmed by the learned District Judge, Dhubri by the order dated 9.2.2004 passed in Misc. Appeal No. 5 of 2003. 2. The principle contention advanced before the learned Single Judge hearing the application under Article 227 of the Constitution was to the effect that an order fixing fair rent cannot be given retrospective operation. The learned Single Judge has taken a prima facie view that such an interpretation may cause prejudice to the landlord and further that the general principle of law is that a case should be decided with effect from the date of cause of action. However, noticing; two judgments of this Court delivered in Balaram Sarkar v. Sankar Prasad Roy 1987 (2) GLR 161 and in Hanskumar Jain and Ors. v. Shri Jadunandan Sarma 1988 (2) GLJ 292, the learned Single Judge was of the view that the matter should be referred to a Division Bench for adjudication of the following question: Whether fair rent fixed by the court below in a proceeding under Assam Urban Areas Rent Control Act, 1972 shall have retrospective or prospective application? This is how the matter has been placed before us. 3.
This is how the matter has been placed before us. 3. Before proceeding any further, it will be necessary to set; out here under the provisions of Section2(e) of the Assam Urban Areas Rent Control Act, 1972, ("the Act"), which defines 'standard rent'; Section 3 of the Act which deals with 'fair rent' and Section 4 of the Act; which deals with the procedure for determination of fair rent: Section 2(e): "standard rent" in relation to any house means the rent calculated on the basis of annual payment of an amount equal to seven and half per cent of the aggregate amount of the estimated cost of construction and the market price of the land together with the total municipal taxes payable in respect of the house and urban immovable property tax under the Assam Urban Immovable Property Tax Act, 1969 (Assam Act XI of 1969), monthly rent shall be equal to one-twelfth of the annual payment so calculated: Provided that in fixing the standard rent of any multi-storeyed building, the market value of the land shall be taken into consideration only once to be apportioned in between the different floors of such building on the basis of the areas of each floor: Provided further that in fixing the standard rent of each floor or any part thereof of such multi-storeyed building, the estimated cost of construction of such floor or any part thereof, as the case may be, and the proportionate market value of the land calculated in the manner stated hereinbefore, shall be taken into consideration. 3. Fair rent.- (1) Subject to the provisions of this Act and notwithstanding any contract to the contrary, no landlord shall be entitled to charge rent for any house at a figure higher than the standard rent.
3. Fair rent.- (1) Subject to the provisions of this Act and notwithstanding any contract to the contrary, no landlord shall be entitled to charge rent for any house at a figure higher than the standard rent. (2) If at any time after five years from the date on which a house is in continuous occupation of a tenant, the market price of the land and estimated cost of construction of the house increases by more than twenty-five per cent on the basis of the value of land and cost of construction of the house on the date of preceding fixation of fair rent, then the landlord shall be entitled to have monthly rent increased by an amount not exceeding one-twelfth of the seven and half per cent of the increase in the market price of the land and cost of construction, on the date of preceding fixation of fair rent, from the dates as may be prescribed subject to a maximum of fifty per cent of the preceding standard rent; Provided that subsequently after lapse of every five years of the revision of fair rent, if the market price of land and the estimated cost of construction of house increases by more than twenty-five per cent on the basis of market value of land and the then the landlord shall be entitled to have monthly rent increased by an amount not exceeding one-twelfth of the seven and half per cent of the additional increase in the market value of land and the estimated cost of construction of house on the date of preceding revision of fair rent, from the date as may be prescribed subject to a maximum of fifty per cent of the revised fair rent. (3) If at any time after the standard rent is fixed under the provisions of the Act, any addition, improvement or alteration (not being repairs) within the meaning of the provisions of Section 6 is effected at 'the landlord's expense which was not taken into consideration in fixing1 the standard rent, then the landlord shall be entitled to have the monthly rent increased by an amount not exceeding one-twelfth of seven and half percent per annum of the cost of such addition, improvement or alteration with effect from the date on which the addition, improvement or alteration was completed.
(4) If at any time after the standard rent is fixed under the provisions of the Act, there is a variation of tax by way of Municipal assessment of the building and under the Assam Urban Immovable Property Tax Act, 1969 (Assam Act XI of 1969), the standard rent will be liable to be fixed taking the variation into account. 4. Procedure for determination of fair rent.- (1) If any dispute arises regarding the rent payable in respect of any house, it shall be determined by the court. (2) The court shall, on application made by either the landlord or the tenant, issue notice on both the parties, and after making such enquiry as it thinks fit, determine the monthly rent for the house in accordance with the provisions of Section3 and the rent so determined shall be binding on both the parties. (3) Where the court determines the monthly rent for any house under this section, it shall do so for the house in the unfurnished state, but it may allow the landlord to charge an additional amount per month on account of the furniture supplied by him: Provided that such additional amount shall not exceed one-twelfth of seven and half per cent of the cost of such furniture on the date on which the court determines the monthly rent for the house. 4. "Standard rent" as the definition contained in Section 2(e) of the Act would indicate is the rent for any premises that is fixed after taking into account all the factors mentioned therein. Once standard rent is fixed, the contractual rent cannot be in excess thereof by virtue of Section 3(1) of the Act. Determination of the standard rent, therefore, cannot be left to the volition of the parties and may have to be fixed by the court though there is no specific provision in the Act to the said effect. Such an exercise i.e., determination of standard rent may also be necessary in a proceeding for determination of fair rent for which determination again certain parameters have been prescribed by Section 3(2) of the Act. Once fair rent is determined in a proceeding under Section 4 of the Act, naturally such fair rent, which includes permissible increase of the monthly rent, may be higher than the standard notwithstanding the provisions of Section 3(1) of the Act.
Once fair rent is determined in a proceeding under Section 4 of the Act, naturally such fair rent, which includes permissible increase of the monthly rent, may be higher than the standard notwithstanding the provisions of Section 3(1) of the Act. This is made clear by Section3(1) of the Act itself which makes the mandate contained therein subject to the provisions of the Act. This is the essential difference between the 'standard rent' and 'fair rent' under the provisions of the Act. 5. Having indicated the concept of "standard rent" and "fair rent", we may now proceed to consider the various judicial pronouncement with regard to the effective date from which the determination of fair rent can be made. 6. In Balaram Sarkar (supra), the question before the court was whether a suit for eviction of the tenant under Section 5 of the Act is liable to be stayed under Section 10 of the Code of Civil Procedure on the ground that an earlier application under Section 4 for fixing fair rent was pending before the court. The answer to the above question provided by the court in Balaram Sarkar (supra) was in the negative; the basis therefore was that, a proceeding for fixing fair rent under Section 4 is not a suit. One of the grounds relied upon to reach the above conclusion was that in a suit the decree passed is effective from the date of institution of the suit whereas fixation of fair rent is effective from the date of the order of the court and not from the date of filing. The authority for the above proposition with regard to the date of the order fixing fair rent was derived from a Single Bench decision of this Court in Syed Faizul Haque v. Sohan Lal Oswal ILR 1959 Assam 125 and also the decision in Surajmal Jain v. Konaklata Baruah AIR 1964 Gau 102. 7. In Hanskumar Kr. Jain (supra), a similar view was taken once again relying on the same Single Bench Judgment in the case of Syeql Faizul Haque (supra). The decision in Syed Faizul Haque, relied upon, in turn/followed an earlier Division Bench Judgment in Tabarak Hussain v. Santosh Chandra Paul and Ors. (unreported). A slightly different view found manifestation in the judgment of this Court in Union of India v. Mahavir Prasad Goenka and Ors.
The decision in Syed Faizul Haque, relied upon, in turn/followed an earlier Division Bench Judgment in Tabarak Hussain v. Santosh Chandra Paul and Ors. (unreported). A slightly different view found manifestation in the judgment of this Court in Union of India v. Mahavir Prasad Goenka and Ors. 1988 (1) GLR 337 where in fixation of fair rent with effect from an anterior date by the rent controller was approved. However, in the said case, there was a specific agreement between the parties to be governed by the rent to be determined with effect from the said anterior date. 8. From the above, it is clear that in all the decisions available on the point i.e., Syed Faizul Hoque (supra), Balaram Sarkar (supra) and Hanskumar Jain (supra), the somewhat consistent view of this Court that fixation of fair rent by the court will be effective from the date of determination made by the court flows from the unreported decision of this Court in Tabarak Hussain v. Stantosh Chandra Paul and Ors. It will, therefore, be necessary to have a close look at the facts in which the aforesaid decision was rendered and the issues that arose in the said case. 9. In Tabarak Hussain v. Santosh Chandra Paul, the defendant-tenant, who had lost in both the courts below raised a contention that the rent payable under the Act for the tenanted premises was not more than Rs. 12 per month and, therefore, after determination of the said question by the trial court, all amounts paid in excess should be adjusted to determine whether the tenant was a defaulter. This was Notwithstanding the fact that when the suit was filed for ejectment the agreed rent between the parties was Rs. 40 per month and the tenant had tried to tender rent at the said rate by money order which was refused by the landlord. The trial court declined to carry out the said exercise which refusal was agitated before this Court in the civil revision proceeding. The Division Bench, inter alia, took the view that - "If cannot be said that the court in trying the suit for ejectment can itself fix the fair rent and then say - this is the rent allowable under the Act.
The Division Bench, inter alia, took the view that - "If cannot be said that the court in trying the suit for ejectment can itself fix the fair rent and then say - this is the rent allowable under the Act. The second answer a the contention is that so long as any other rent has not been fixed, the rent which the tenant has been paying all along under the agreement will be rent lawfully due and therefore in the present case it cannot be said that the rent payable under the agreement was not lawfully due." Apart from the above ground, there were certain other weighty reasons which had prevailed upon the Division Bench to dismiss the plea urged before it on behalf of the tenant. Apart from the above basis on which the final conclusion of the Division Bench had been based, it was further observed in the judgment as follows: Further in determining the fair rent under Section 4, it is doubtful if any retrospective effect can be given to such a determination and if the contention of the appellant is given effect to in the present case, the result will be that the order of the court determining the fair rent in the suit will be given a retrospective effect inasmuch as although the rent will be determined in the suit, the payment made earlier will have to be adjusted accordingly. Such an interpretation cannot be accepted. 10. Having noticed the context in which the observations of the Division Bench with regard to retrospective effect of the determination of fair rent came to be recorded in Tabarak Hussain v. Santosh Chandra Pal and Ors., it is extremely doubtful whether the said observations or conclusions, even if the same are to be treated as conclusions of the court, can be understood to be the ratio of the decision. First of all, the said observations/conclusions merely lends additional support to the conclusions which had already been reached on other grounds. Secondly, in Tabarak Hussain (supra), the question of retrospective effect to an order of determination of fair rent under Section 4 of the Act did not arise directly and the issue was dealt with by the court co-laterally, as already noticed and further as an additional ground for the conclusions already reached on other grounds.
Secondly, in Tabarak Hussain (supra), the question of retrospective effect to an order of determination of fair rent under Section 4 of the Act did not arise directly and the issue was dealt with by the court co-laterally, as already noticed and further as an additional ground for the conclusions already reached on other grounds. We, therefore, have no hesitation in holding that the decision in Tabarak Hussain is not an authority for the proposition that the determination of fair rent cannot be retrospective. 11. However, retrospective effect to a determination of fair rent is not the same as giving effect to such determination from the date of filing of the application for fair rent. The general principle of law is that determination of inter-party rights in a suit or other proceeding is made with effect from the date of accrual of the cause of action. Giving effect to such determination from the date of accrual of cause of action, therefore, must not be understood to be giving retrospective effect to the declaration or determination made in such proceedings. Only if such effect is given effect from a date anterior to the date of accrual of cause of action, it can be understood that retrospective effect to such, declaration or determination has been given, e.g., in the present case from the date of inception of the tenancy. Such retrospective effect i.e., from a date anterior to accrual of the cause of action obviously cannot be given as a right to have the fair rent fixed/determined accrues only after elapse of five years from the date of commencement of the tenancy. Furthermore, the Act contemplates enforcement of the said right on the basis of an application to be filed under Section 4. If enforcement of the right by the court has been made contingent on the filing of an application under Section 4, it is difficult to see as to how retrospective effect to the determination made, i.e., with effect from a date earlier to the filing of the application can be given by the court. Therefore, in our understanding there is a difference between retrospective effect to a determination of fair rent and the making of such determination effective from the date of filing of the application.
Therefore, in our understanding there is a difference between retrospective effect to a determination of fair rent and the making of such determination effective from the date of filing of the application. While retrospective effect cannot be given, it remains to be seen whether a determination of fair rent can be made from the date,of filing of the application under Section 4(2). 12. In the discussions that have preceded we have already indicated that fixation of fair rent will presuppose the existence of the standard rent, which if not determined has to be determined in the first instance unless both the parties agree that the contractual rent may be understood to be the standard rent. The Act contemplates that the standard rent, understood as above, is liable to increase after five years of the commencement of the tenancy and every five years thereafter. The Act also contemplates that an application for determination of fair rent can be filed either by the landlord or by the tenant. The filing of an application for fair rent may not necessarily coincide with the date when fixation of fair rent is due under the Act. Such an application from the landlord may come later. In case the tenant files an application for determination of fair rent, such an application necessarily will have to be after enhancement of the contractual rent. If such an application of the tenant is bought any time before five years from the date of commencement of the tenancy, such an application has to be understood to-be one for fixation of standard rent as against the contractual rent. The above clarification has been considered to be necessary as there appears to be a free exercise of the power under Section 4 by the courts in the State of Assam oblivious of the nature of the determination that is being made i.e., whether it is one fixing the fair rent or fixing the standard rent. If rent is fixed at any time before five years of the commencement of the tenancy, what is fixed cannot be the fair rent and, therefore, has to be understood to be standard rent under the Act. 13.
If rent is fixed at any time before five years of the commencement of the tenancy, what is fixed cannot be the fair rent and, therefore, has to be understood to be standard rent under the Act. 13. However, regardless of whether it is the landlord or the tenant who has filed the application for fair rent, once the order determining the fair rent is passed, after following the mandate of Section 3of the Act, such determination of the entitlement of the landlord, necessarily has to relate back to the date on which the entitlement accrued under the Act. Such a date often does not coincide with the date of filing of the application. In such a situation, the accrual of the right can be more reasonably understood with reference to the date of filing of the application. This is from the landlord's prospective. In case of the tenant, the determination of fair rent if found to be in excess of the contractual rent or enhancement thereof, the tenant becomes entitled to return/refund/adjustment of the excess rent from such date that he had overpaid. Once again, if such a date can be understood to be the date of filing of the application by the tenant, instead of date of passing of the order of the court, such an interpretation would be preferable as it would determine the rights of the tenant on the date when the right actually accrued to him. The court is, therefore, of the view that an interpretation which would determine the rights of both the parties i.e., the landlord and the tenant on the date of accrual of the rights/entitlement rather than an uncertain date of the court's order would be a more reasonable understanding of the provisions of the Act. The principle that the law always intends what is reasonable and fair to both the parties would strongly tilt our opinion to the effect that the determination of fair rent can be made from the date of filing of the application under Section4(2). 14. There is one connected aspect of the matter which would require our attention.
The principle that the law always intends what is reasonable and fair to both the parties would strongly tilt our opinion to the effect that the determination of fair rent can be made from the date of filing of the application under Section4(2). 14. There is one connected aspect of the matter which would require our attention. In the course of the extensive deliberations that had taken place, a question has been raised as to whether determination of fair rent from an anterior date, even if it be the date of filing of the application, will not make the tenant a defaulter inasmuch as such determination from an anterior date would determine the rent lawfully due from the tenant from such earlier date. The tenant, we are told, may not be in a position to overcome such "default" under the existing provisions of the Act, which enables the tenant to make a deposit of the rent in court within the stipulated time, i.e., a fortnight of its falling due. We see no reason why such a situation would ever occur. Giving effect to a determination of fair rent from the date of filing of the application will not transpose the order of the court to an anterior point of time. The tenant cannot be labelled as a defaulter on any date earlier than the date of the order of the court determining fair rent. Giving effect to the said order from an anterior date will only create an obligation on the tenant to pay the rent from the said anterior date as arrear rent. The position would much be the same as in the case of increase of the contractual rent with effect from an anterior date by mutual agreement between the landlord and the tenant. 15. We, therefore, answer the reference made accordingly by holding that fixation of fair rent can be from the date of filing of the application under Section 4(2) of the Act. The matter may now be posted before the learned Single Judge for passing of necessary and consequential orders as may be called for.