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2019 DIGILAW 467 (KER)

C. K. JINAN v. GIRIDHARAN

2019-06-19

A.HARIPRASAD, T.V.ANILKUMAR

body2019
COMMON ORDER T.V. Anilkumar, J. The revision petitioners in RCR.No.264/2016 are the landlords of a shop room bearing door No. 40/433 having 1,051 sq.ft of plinth area situated in the ground floor of a building called Chandrika buildings in MG Road, Ernakulam Town. The revision petitioner in RCR.No. 344/2016 is the tenant of the said shop room conducting a show room of 'NIKE' products. 2. Being aggrieved by the order of the Rent Control Court, Ernakulam in RCP.No.173/2012 passed on 31.10.2014 fixing fair rent of the said shop room at the rate of Rs.50 per sq.ft with effect from the date of petition on the motion of the landlords, both parties filed appeals challenging the order before the Rent Control Appellate Authority, Ernakulam. RCA.No. 1/2015 filed by the tenant and RCA.No.3/2015 filed by the landlords, were dismissed by the Appellate Authority by a common order dated 18.06.2016 affirming the order of the Rent Control Court. Being aggrieved by the dismissal of both appeals, the parties have come up in revision before this Court invoking Section 20 of the Kerala Buildings (Lease and Rent Control) Act 1965 (herein after referred to as 'the Act'). 3. The petition schedule shop room situated in the ground floor of Chandrika Building is part of a four storied building located in Ernakulam Town. The tenancy arrangement between parties commenced in 1970 on initial monthly rent of Rs.1,050/-. The monthly rent was later increased periodically and in 2010, it was further enhanced to Rs.23,903/- per month. According to the landlords, the shop room is provided with all the modern amenities and is also located in a commercially important place having proximity to the Bus and Railway stations. Further, many jewellery shops and famous hotels are also situated within a radius of 200mts. from the petition schedule shop room. The contention of the landlords before the courts below was that the monthly rent of similar shop rooms prevailing in the locality was Rs.120/- per sq.ft and therefore they were also entitled to have fair rent for the schedule shop room enhanced to monthly rent of Rs.1,26,120/- at the same rate per sq.ft. from the date of petition filed under Section 5 of the Act. 4. The tenant does not dispute either the area of the shop room let out or the existing landlord tenant relationship between the parties. from the date of petition filed under Section 5 of the Act. 4. The tenant does not dispute either the area of the shop room let out or the existing landlord tenant relationship between the parties. The contention of the tenant is that fair rent sought to be fixed at the rate of Rs.120/- per sq.ft is not reasonable but only exorbitant and the shop rooms placed in similar circumstances in the locality do not fetch monthly rate of Rs.120/- as claimed by the landlords. The commercial importance of the locality was questioned and the tenant further denied that the petition schedule shop room had any modern amenities. It was alleged that during monsoon, water collected in the near by premises used to seep into the ground floor and disturb his business. The shop room did not have any advantage of car parking for the customers. According to the tenant, the monthly rent being paid to the landlords since 2012, is Rs. 27,711/- and not Rs.23,903/- as alleged by the latter. The demand for fixation of fair rent is also opposed on the ground that tenant has been paying revised rent at the enhanced rate once in every two years as agreed between the parties. 5. The Rent Control Court on the motion of the landlords deputed an advocate commissioner to report the alleged commercial importance of the locality as well as the existing amenities alleged to be attached to the schedule shop room. The Advocate Commissioner was further asked to report the prevailing market rent of similarly placed buildings in the locality. It examined PW1 to PW3 and RW1. Exhibits A1 and A2 on the side of the landlords and Exhibit B1 on the side of tenant were also marked. Exhibits X1 and X2, and Exhibit-C1 are the other items of documentary evidence on record. 6. The Rent Control Court on the basis of the Commission Report came to the conclusion that Chandrika building of which the petition schedule shop room forms part is situated in a commercially important area. The building was old and did not provide car parking facilities for the customers. It held on the basis of materials placed on record before it that buildings similar to the petition schedule shop room in the locality were not proved to fetch monthly rent of Rs.120/- per sq.ft as claimed by the landlords. 7. The building was old and did not provide car parking facilities for the customers. It held on the basis of materials placed on record before it that buildings similar to the petition schedule shop room in the locality were not proved to fetch monthly rent of Rs.120/- per sq.ft as claimed by the landlords. 7. The landlords sought to prove through PW3 who is one of their tenants occupying another portion of the Chandrika Building that the current rate of monthly rent being received for the petition scheduled shop room was much lower than the modest market rent and this tenant used to pay for his shop Rs.109/- per sq.ft as monthly rent. This evidence was not accepted by the courts below nor did they take into account the alleged rent being paid by PW3 as relevant and reasonable basis for fixing fair rent of the petition scheduled shop room. The Rent Control Court and the Rent Control Appellate Authority after following the guidelines in Edger Ferus v. Abraham Itticheria,2004 KHC 123, took the view that in the facts and circumstances of the case, the landlords were not entitled to claim more than Rs.50/- per sq.ft as fair rent of the schedule shop room. While fixing Rs.52,530/- as the total monthly fair rent, the courts below also allowed periodic increase at the rate of 30% of monthly rent once in every five years. In short, a sum of Rs.52,530/- was fixed as the monthly fair rent of the petition schedule shop room having 1,051 sq.ft of plinth area since 10.12.2012, the date of petition filed seeking fixation of fair rent. 8. As already stated above, the landlords and tenant challenged the order of the Rent Control Court in their respective appeals which were dismissed by the Rent Control Appellate Authority after affirming the order of the Rent Control Court. 9. We heard the learned counsel appearing for petitioners in both revision petitions. 10. The sole question for consideration in these revisions is whether the concurrent finding of the courts below in the orders passed by them is vitiated by any illegality, impropriety or irregularity. 11. 9. We heard the learned counsel appearing for petitioners in both revision petitions. 10. The sole question for consideration in these revisions is whether the concurrent finding of the courts below in the orders passed by them is vitiated by any illegality, impropriety or irregularity. 11. The main contention of the tenant raised in R.C.R.No.344/2016 filed by him is that petition for fixation of fair rent is not maintainable since there was mutual agreement between parties consenting to increase of monthly rent once in every two years at the rate of 10%. According to the tenant, after monthly rent was increased to Rs.23,903/- in 2010, it was further revised to Rs.27,711/- and as on the date of petition before the Rent Control Court, he was paying monthly rent of Rs.27,711/- as mutually agreed between parties. This is what the agent of tenant examined as RW1 testified in court. But PW1, the Manager of landlords was not prepared to agree to this contention of tenant as a whole. What PW1 said is that the agreement consenting for increase of rent once in every two years was not limited to 10% but intended to be increased commensurate with the prevailing market rent of the locality. He further said that cheque for Rs.24,711/- offered as monthly rent for April 2012 was refused to be accepted by landlords since it was not reasonable. 12. The learned counsel for the tenant-revision petitioner in RCR.No. 344/2016 argued that in view of the oral agreement between the parties consenting for increase of monthly rent once in every two years at the rate of 10%, the landlords were estopped from claiming rent higher than what was agreed and therefore itself, petition under Section 5(1) of the Act was not maintainable under law. We find it very difficult to agree to this contention because that was not a case pleaded by the tenant. Even otherwise also, the landlords are not prepared to admit that they had agreed for increase of monthly rent at the rate of 10% once in every two years. On the other hand, what PW1 tried to clarify is that the mutual arrangement between parties was to see that the rent was revised periodically in tune with the growing market rent payable for similar buildings in the locality. On the other hand, what PW1 tried to clarify is that the mutual arrangement between parties was to see that the rent was revised periodically in tune with the growing market rent payable for similar buildings in the locality. If this could be taken as the correct statement of fact, then in our view quantification of rent shall be guided by the principles evolved in Edger Ferus v. Abraham Itticheria,2004 KHC 123, and therefore we hold that the R.C.R.No. 344/2016 questioning the maintainability of the Rent Control Petition is devoid of any merit. 13. The conditions for fixing fair rent of a building under Section 5 of the Act have been enumerated in Edger Ferus (supra) and going by the legal principles, one of the parameters to be given effect to in this respect is to ascertain the market rent being paid for similar buildings in the locality. The burden of proof to establish what similar buildings in the locality fetch as their monthly fair rent, is upon the landlord himself. So far as the present case is concerned, the tenant was not examined as a witness, instead his manager gave evidence as RW1. So long as the burden of proof is upon the landlords, non examination of the respondent/tenant in this case cannot be said to be fatal at all. Commission was taken out to ascertain the commercial importance of the locality, the amenities attached to petition schedule shop room as well as the market rent being charged for similar shops in the locality. The Advocate Commissioner after giving notice to parties, visited Chandrika building and other buildings of similar nature situated in the locality on 01.11.2013 and filed ExtC1 report in detail. 14. As per the report, the petition schedule shop room is situate in a commercially important place. The schedule shop room did not have car parking facility nor provided with any modern amenities. In order to ascertain the market rent fetched by similar buildings in the locality, the Advocate Commissioner inspected two shop rooms. The report of the commissioner indicates that the shop rooms visited by him did not fetch monthly rental of Rs.120/- per sq.ft. In short, commission report did not help the landlords to claim fair rent at the rate of Rs.120/- per sq.ft as claimed by them. The report of the commissioner indicates that the shop rooms visited by him did not fetch monthly rental of Rs.120/- per sq.ft. In short, commission report did not help the landlords to claim fair rent at the rate of Rs.120/- per sq.ft as claimed by them. The courts below on the basis of materials on record proceeded to assess monthly rent of the tenanted shop room at the rate of Rs.50/- per sq.ft and ultimately quantified Rs.52,550/- as monthly rent of schedule shop room with effect from 10.12.2012, the date of petition for fixation of fair rent subject to revision of monthly rent at rate of 30% once in every 5 years. The landlords/revision petitioners are aggrieved by the aforesaid low rate of rent fixed by the courts below than what they had claimed in their petition. 15. The landlords rely on the data and information furnished by the Advocate Commissioner in Ext.C1 report for contending that the materials therein form reasonable basis for fixing fair rent for the schedule shop room. The tenant has not filed any objection to this report at all. According to the Advocate Commissioner, he visited a shop room in Chandrika Buildings itself dealing in the business of luggage situated about 25 meters away from the schedule shop room and found the tenant thereof being in occupation of 391 sq.ft., in the ground floor paying a monthly rent of Rs.35,000/-. In other words, the monthly rent for this tenanted luggage shop room is Rs.89/- per sq.ft. The argument advanced by the learned counsel for the landlords is that the fair rent fixed by the courts below is much lesser than the rent paid for the above shop room and therefore the impugned order requires to be interfered with. We are not inclined to accept this argument since the rent for luggage shop as reported by the Advocate Commissioner has not been proved to be the actual rent paid by the tenant. His information is solely based on hearsay gathered from the local sources. Commission report based on hearsay is not admissible in evidence despite the fact that no objection has been raised to that part of the report. No documents are also forthcoming to prove that the luggage shop fetched monthly rent of Rs.89/- per sq.ft. 16. Another shop room inspected by the Commissioner on the same day is one occupied by PW3. Commission report based on hearsay is not admissible in evidence despite the fact that no objection has been raised to that part of the report. No documents are also forthcoming to prove that the luggage shop fetched monthly rent of Rs.89/- per sq.ft. 16. Another shop room inspected by the Commissioner on the same day is one occupied by PW3. He is conducting a textile shop in Chandrika Buildings itself which is very closely situate to the immediate south of petition schedule shop room. The monthly rent paid by PW3 as reported in Ext.C1 report is Rs.36,000/- for 340 sq.ft. in the ground floor occupied by him. Mathematically, this monthly rent per sq.ft would figure as Rs.109/-. The landlords of PW3 are the petitioners in RCP 173/2012. The courts below were not prepared to accept the above rate of rent reported in Ext.C1 and also the evidence given by PW3 in that respect. The contention of the tenant is that the evidence brought forth before this court does not reflect the real rent of the textile shop and it was artificially projected in the evidence. 17. It is true that the photocopy of the rent deed with respect to the textile shop handed over to the Advocate Commissioner was produced along with Ext.C1 report in court. But the rent deed was not tendered in evidence either through PW1, the Manager of the landlords or through PW3 himself. Ext.X2 series Rent receipts issued in the name of PW3 were produced to prove that Rs.36,000/- was being paid as monthly rent for the shop room though the genuineness of these receipts was disputed by the respondent/tenant. In order to corroborate Ext.X2 series, PW2 Bank Manager of South Indian Bank where account of the landlords was kept, was summoned to prove Ext.X1 bank statement containing entries regarding the payment of rent by means of cheques. Ext.X1 statement was, however, not admitted in evidence. If the rent paid by PW3 is proved to be correct, the rent for each sq.ft of his shop room should reflect Rs.109/- per sq.ft. But the courts below were not prepared to accept this rate as relevant basis for fixing the fair rent of the petition schedule shop room for other reasons. If the rent paid by PW3 is proved to be correct, the rent for each sq.ft of his shop room should reflect Rs.109/- per sq.ft. But the courts below were not prepared to accept this rate as relevant basis for fixing the fair rent of the petition schedule shop room for other reasons. According to the Rent Control Court as well as the Appellate Authority, the rent alleged to have been paid by PW3 did not reflect the genuine market rent prevailing in the locality. 18. During cross-examination of PW1, it came out from his evidence that Rs.10/- and Rs.32/- per sq.ft were the monthly rents being collected by the landlords for some of the rooms situated in the 3rd floor of the Chandrika Buildings. According to the courts below, if this is true, under no circumstances, rent for ground floor in Chandrika building could be double or thrible. The courts below also gave due weight to the fact that many of the rooms in Chandrika Buildings remained vacant as if there were least demands for rooms made by the tenants. Taking all these aspects together, the courts below took a definite view that fair rent of petition schedule shop room could be fixed at Rs.50/- per sq.ft. We do not find any illegality, irregularity or impropriety in the view taken by the courts below. 19. The learned counsel for the landlords submitted that fair rent of the scheduled shop room requires to be determined at the rate of Rs.120/- per sq.ft for another reason. It was argued that the tenant has been conducting a franchisee business of 'Nike', an international product in the scheduled shop room on accepting monthly rent of Rs.1,50,000/- from the franchiser. The substance of the argument is that when a very attractive rent is offered by the franchiser, under no circumstances, fair rent of the shop room could be less than Rs.120/- per sq.ft. But we find that this contention of the landlords does not form part of their pleadings. Further, this contention was not proved by any evidence also. There was an attempt made by the landlords seeking production of franchisee agreement from the alleged possession of the tenant-franchisee by filing I.A. No.4515/2014 before the Rent Control Court. But the tenant filed an affidavit swearing that there was no franchisee agreement executed between parties nor such an alleged agreement was ever in his possession. There was an attempt made by the landlords seeking production of franchisee agreement from the alleged possession of the tenant-franchisee by filing I.A. No.4515/2014 before the Rent Control Court. But the tenant filed an affidavit swearing that there was no franchisee agreement executed between parties nor such an alleged agreement was ever in his possession. Production of audited balance sheets for the years 2012 to 2014 sought was also opposed on the ground that the tenant was not in possession of these documents. In the absence of these documents being brought in evidence, the contention of the landlords that there is franchisee arrangement with the tenant for a monthly rent of Rs.1,50,000/- cannot be accepted at all. 20. The Rent Control Court fixed Rs.50/- sq.ft as fair rent of the tenanted shop room relying on various aspects inclusive of the rate of rent being received by the landlords for similar rooms in other floors of Chandrika building owned by them. PW1, the manager said that for some rooms in third floor, Rs.10/- per sq.ft., was being collected whereas in respect of some other rooms, the rate of rent collected was Rs.32/- per sq.ft. Along with these rates of rent, the courts below noted that there was no car parking facility provided for Chandrika building. Again the fact that the building was one of the old buildings in the locality was also taken note of. Since Rs.50/- sq.ft was fixed taking into account all these facts together, as we already held, we do not find any reasonable ground to interfere with the conclusion reached by the courts below in fixing Rs.50/- per sq.ft., as the fair rent. 21. The learned counsel for the tenant, however, relied on Ext.B1 judgment dated 11.4.2014 in R.C.A No. 119/2011 delivered by the District Court, Ernakulam to contend for the position that fair rent fixed for similar building in the locality was much lower than Rs. 50/- sq.ft. We are told that Ext.B1 judgment was later confirmed in RCR.No. 151/2015 on 14.8.2018 by this Court sitting in revisional jurisdiction. But the fact remains, as already pointed out by the courts below, that Ext.B1 judgment does not relate to a shop room which is similar to the petition scheduled shop room. Further more, these judgments are not inter partes also. But the fact remains, as already pointed out by the courts below, that Ext.B1 judgment does not relate to a shop room which is similar to the petition scheduled shop room. Further more, these judgments are not inter partes also. On an over all consideration of evidence and law, we are satisfied that there is no illegality, impropriety or irregularity in the impugned order dated 18.6.2016 passed by the Rent Control Appellate Authority in RCA 1 and 3 of 2015 requiring our interference in revision. We, therefore, confirm the said impugned order of the appellate authority. In the result, both revision petitions are dismissed as being devoid of any merit.