CANARA BANK, BANGALORE REPRESENTED BY ITS DEPUTY GENERAL MANAGER v. DEVA PROPERTIES LTD.
2017-04-03
K.HARILAL, RAJA VIJAYARAGHAVAN V.
body2017
DigiLaw.ai
ORDER : Raja Vijayaraghavan, J. 1. The tenant, a Nationalized Bank, challenges the order concurrently passed by the Rent Control Court as well as the Appellate Authority in fixing the rent in respect of the building under its possession. 2. The petition schedule building is a multi storied structure which was leased out to the Bank in the year 1994 by virtue of Exhibit A4 lease deed fixing the monthly rate of rent at Rs.15,86,767.41/-. It is borne out from the materials that the building is a modern concrete structure having 9 floors with basement, floor area and adequate parking space. The building is situated right in the heart and main business center of Thiruvananthapuram. The Government Secretariat, University College, AG's Office are all situated at close quarters. The market value of land in the area is in excess of Rs.60 lakhs per cent and the building would fetch a rent of not less than Rs.45 per square feet. Structuring the petition on the above averments, the petition was filed seeking fixation of rent. 3. The tenant raised several contentions to stifle the claim advanced. They contended that the landlord had no right to seek enhancement of rent as the original lessor had created an equitable mortgage in respect of the building. They challenged the locus standi of the landlord in preferring the petition, as according to the tenant, the present landlord cannot alter the arrangement entered into between the tenant with the original lessor. The original lessor having agreed for crystallization of rent for a period of 99 year, it was contended that the petition was not maintainable. According to the tenant, the building has no exceptional features and the property tax as well as the maintenance expenses has remained stagnant all through. They sought for dismissal of the petition. 4. The evidence on the side of the landlord consisted of the oral evidence of PW 1. Exhibits A1 to A 10 were marked. The tenant examined CPW 1 and Exhibits B 1 to B 5 were marked on his side. 5. The Rent Control Court, relying on Exhibits A1 to A3 and A6 to A7 and also the oral evidence of the PW1, came to the conclusion that the contention of the tenant that the landlord has no locus standi to file the petition cannot be sustained.
5. The Rent Control Court, relying on Exhibits A1 to A3 and A6 to A7 and also the oral evidence of the PW1, came to the conclusion that the contention of the tenant that the landlord has no locus standi to file the petition cannot be sustained. It was held that the petition filed by the landlord for fixation of rent was perfectly maintainable. Insofar as the fixation of fair rent is concerned, the trial Court took note of the guidelines issued by this Court in Edger Ferous V Abraham Itti Cherian [ 2004 (1) KLT 767 ] and concluded that the rent will have to be enhanced in view of the increase in taxes, living cost and rate of rent. Holding so, the rent was enhanced to Rs.40/- per square feet per mensem. 6. The relevant discussion is in para No. 10 of the order of the Rent Control Court which is extracted below for easy reference. "10. In considering the present case, in the petition itself the petitioner has clearly pleaded about the importance of the locality but the same has not been specifically denied in the objection filed by the counter petitioner. To prove the case of the petitioner the Managing Director of the petitioners company is examined as PW1. Regarding the importance of the locality apart from the averments in the petition PW1 gave evidence. The counter petitioner has not seriously denied the locational importance as well as the present rate of rent. Here from the petition as well as from the evidence of PW1 it is clear that the petition schedule building is in the heart of city in M.G.Road at Spencer Junction near to Accountant General's Office, Govt. Secretariat, University College, V.J.T.Hall and Palayam Bazar. Though it is stated in the petition that prevailing rate of rent for similar building has been increased, no document is produced to support his version. Admittedly the present rate was fixed as early as in 1993 and now the rate of rent as well as the taxes and living cost is very high. So even if the petitioner herein has not produced any document to show the prevailing rate of rent. I think considering the increase in the taxes, living cost and the rate of rent of the petition schedule has to be fixed at the rate of 40 per sq.feet/m." (emphasis supplied) 7.
So even if the petitioner herein has not produced any document to show the prevailing rate of rent. I think considering the increase in the taxes, living cost and the rate of rent of the petition schedule has to be fixed at the rate of 40 per sq.feet/m." (emphasis supplied) 7. It appears from the order that no evidence was let in to prove the prevailing rate of rent for similar building in the locality or any of the relevant factors which could have enabled the Court below to fix the fair rent. The principles enunciated in Edger Ferous (supra) have somehow or the other escaped the notice of the Rent Control Court though the decision was profusely relied on by the Court to invoke jurisdiction. It appears to us that a lot of guess work has gone in and we find it difficult to sustain the said order. Though the locational importance cannot be disputed, the Court below was bound to take note of several other factors to arrive at the amount. No such endeavor is seen made in the instant case. 8. The Appellate authority while confirming the order of the Rent Control Court has held as follows in para No. 13 of the judgment. 13.....................Needless to say, the substantial increase and hike in various sphere from 1993, the period of entrustment till date or at least till the date of the petition is so obvious and apparent. The locational importance, commercial development and the reasonable advances in amenities enjoyed by the public are all contributory factors augmenting market value of the site as well as market rent of the structure as such. Strictly following the guidelines illustrated in Edger Ferus's case for fixation of fair rent, this court does not find any hesitation to uphold the observation of the court below that the respondent/landlord is entitled to such a relief. Acceptable and reliable evidence has been tendered on record by PW 1 substantiating his case. Undisputedly the petition schedule promises is situated in a very commercially significant spot in the city, very nearly placed to various important offices, government institutions et cetera. The court below rightly took note of the fact that no document of neighbouring promises produced by the landlord to show the prevailing rate of rent for similar buildings.
Undisputedly the petition schedule promises is situated in a very commercially significant spot in the city, very nearly placed to various important offices, government institutions et cetera. The court below rightly took note of the fact that no document of neighbouring promises produced by the landlord to show the prevailing rate of rent for similar buildings. Even then, disregarding the lack of such an evidence on record, it can be unhesitatingly concluded that the rent fixed in 1993 cannot reign the field now without any change despite the lapse of such a long interval. So, without any further discussion, I conclude that the prayer of the respondent/landlord seeking enhancement of rent and for fixation of fair rent is always reasonable, fair and proper and the order of the court below alarming such a relief is not liable to challenge. So the challenge is raised by the appellant on merit is liable to fail. (emphasis supplied) 9. Though the Appellate Court also took note of the fact that no evidence was let in to prove the prevailing rate of rent and other relevant factors, the order passed by the Court below was upheld. It seems that the unrivaled locational importance of the building persuaded the court below to confirm the order of the Rent Control Court. 10. Though both the courts below have followed Edger Ferus, the guidelines laid down in the said decision has not been properly adverted to by the Courts below. In Edger Ferus, this Court had directed the courts below to consider various aspects while fixing the fair rent; some of which are as follows : xxxx xxxxx xxxxxx 7. Rent Control Court while fixing fair rent could take note of the inflation and resultant reduction in the purchasing power of money, variations in the cost of living index in the area since commencement of the lease, demand for accommodation and availability of the buildings in the locality. 8. The cost of construction of the building including cost of labour and building materials, capital value of the entire premises in the enjoyment of the tenant inclusive of the value of the land under the actual enjoyment of the tenant whether immediately appurtenant to the building or otherwise, type of construction, locational importance, situations of the tenanted premises, ground floor, first floor etc.
and other advantages and amenities, such as access to places of public importance like bus stand, railway station, educational institution, hospitals etc. would also be guiding factors. 9. The Rent Control Court will also take into consideration the prevailing rent in the locality for the same and similar accommodation. The type of construction, the amenities, general or special provided in the building, the open land attached to the building, whether residential or non residential are also to be borne in mind. 10. Annual rental value of the building at the time of filing the application for fair rent may also be taken as a guiding factor along with others. 11. Revision or fresh imposition of municipal taxes, cess, rate in respect of other increase in the charge of electricity or water consumption by the tenant and also by the landlord and increase on account of sufficient repairs would also be taken note of by the Rent Control Court. 12. The Rent Control Court can while resolving any rent control dispute on a application either by the landlord or tenant examine whether the rent is static and requires revision and fix fair rent accordingly permitting the parties to adduce evidence. 11. We find that no evidence was let in to substantiate the above aspects. Even in respect of the market value of the site on which the building is situated and as regards the comparable rent for similar buildings, no evidence was let in. Though it is submitted at the Bar that a Commission was appointed to report on the type of construction, amenities etc., it does not appear that the same has been marked in evidence. The only factor which was taken note of by the courts below is the immense locational importance, which is undisputed. In view of the paucity of the materials, we are not in a position to interfere and fix the rent to avoid a remand. In that view of the matter, we are of the view that the matter is to be remitted back for the limited purpose of fixing the fair rent. All the other findings arrived at by the Courts below as regards the locus standi of the respondent herein to maintain the petition and also to get the rent re-fixed are sustained. The only question that shall be determined is the fair rent of the petition schedule building.
All the other findings arrived at by the Courts below as regards the locus standi of the respondent herein to maintain the petition and also to get the rent re-fixed are sustained. The only question that shall be determined is the fair rent of the petition schedule building. The guidelines in Edger ferus (supra), which have been extracted in para 10 above, shall be taken note of and the parties shall be permitted to adduce evidence on this limited point. 12. In the result, this Revision Petition is allowed setting aside the order of the Rent Control Court as well as the Appellate Authority and we remit remit the matter back to the Rent Control Court. The Rent Control Court shall endeavor to dispose of the matter expeditiously, at any rate, within a period of four months from the date of production of a copy of the order. The Registry is directed to send back the entire records of the Trial Court as well as the Appellate Authority to expedite the process.