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CASE NO.: Appeal (civil) 6755 2000

PETITIONER: ISHWAR SWAROOP SHARMA

       Vs.

RESPONDENT: JAGMOHAN LAL

DATE OF JUDGMENT:       24/11/2000

BENCH: S.R.Babu, Ruma Pal

JUDGMENT:

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     RUMA PAL, J.

     Leave granted.

     This  appeal  has been preferred from the decision  of the  High Court of Punjab and Haryana affirming the order of the Appellate Authority under Section 4 of the Haryana Urban (Control  of  Rent  and  Eviction)  Act,  1973  (hereinafter referred  to  as  the  Act) fixing the fair  rent  of  the appellants  shop  at Rs.328/- per month w.e.f.  1989.   The shop  was constructed in August 1962.  The appellant let out the  shop  to  the respondent in 1975 at a monthly  rent  of Rs.200/-.   In  1989,  the appellant filed  the  application under  Section 4 of the Act before the Rent Controller.  The Rent Controller considering the evidence of similar premises in the locality, determined the fair rent payable in respect of  the  shop  at  Rs.1000/-   per  month.   The  respondent preferred  an appeal before the Appellate Authority.  On the construction  of  Section  4  of   the  Act,  the  Appellate Authority  came to the conclusion that the appellant  having agreed  to  accept  Rs.200/- from the  respondent,  was  not entitled  to the market rent but to a percentage increase on the  agreed  rent.  The Appellate Authority  calculated  the percentage  of  increase under Section 4 (3) of the Act  and determined  the  fair  rent of the shop to be  Rs.328/-  per month  with  effect from the date of the application.   This decision was affirmed by the High Court on revision.

     Section  4  of  the  Act   provides:   Section  4:   - Determination of fair rent:

     (1) The Controller shall, on application by the tenant or  the landlord of a building or rented land, fix the  fair rent  for  such  building or rent land  after  holding  such enquiry  as  he  may  think fit.  Such fair  rent  shall  be operative from the date of application.

     (2)  In  fixing the fair rent under this section,  the Controller  shall first determine the basic rent which shall be :  -

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     (a)  in  respect  of  the  building  the  construction whereof was completed on or before the 31st day of December, 1961,  or  land  let  out before the  said  date,  the  rent prevailing  in  the locality for similar building or  rented land let out to a new tenant during the year, 1962 and

     (b)  in  respect  of  the  building  the  construction whereof is completed after the 31st day of December, 1961 or land  let  out  after the said date, the  rent  agreed  upon between  the  landlord and the tenant preceding the date  of the  application, or where no rent has been agreed upon, the basic  rent  shall  be determined on the basis of  the  rent prevailing  in  the locality for similar building or  rented land at the date of application,

     (3)  In fixing the fair rent, the Controller may allow an  increase or decrease on the basic rent determined  under sub-section  (2) not exceeding twenty five per centum of the rise  or fall in the general level of prices since the  date of  agreed rent or the date of application, as the case  may be,  in  accordance with the average of All India  Wholesale Price  Index  Numbers,  as determined by the  Government  of India,  for the calendar year immediately preceding the date of application.

     (4) ..

     (5) .

     Under  section 4(2)(b) where a building is constructed after  December1961, as in this case, the fair rent is to be fixed  on  the basis of the rent agreed upon  preceding  the date  of the application.  It is only when there is no  such agreed  rent that the fair rent may be fixed on the basis of the   rent  payable  in   respect  of  comparable  premises. According to the appellant, the phrase rent agreed upon in Section  4(2)  (b) does not cover monthly tenancies.  It  is submitted  that if this were not so, no landlord would  ever be  in a position to avail of the benefit of the later  part of Section 4(2) (b), namely, the determination of basic rent prevalent  in  the  locality for similar buildings.   It  is claimed  that  since the tenancy in question was  a  monthly tenancy,  the  agreement regarding rent came to an end  with each  month.  Therefore, when the application was made there was  no agreed rent within the meaning of Section 4(2)(b). According to the respondent, the shop had initially been let out  to  the respondent at a monthly rent of Rs.50/-.   This was  increased  to Rs.200/- in 1976 and an  endorsement  was made  by  the  tenant on the back of the  rent  receipt  for October  1976  (Exhibit  R-1) to the effect:   As  mutually agreed,  I  agree to pay rent at the rate of  Rs.200/-  (two hundred)  with  effect from first of Nov.  1976  i.e.   from 1.1.1976.

     Sd/- Sd/- Ishwar Sarup Sharma Jagmohan Advocate

     It  is contended that after having mutually  increased the  rent  from 1.1.76 the landlord was bound to accept  and had  continued to accept the sum of Rs.200/-.  As such  this was  the  rent agreed upon within the meaning of  Section  4 (2)(b) and this was the rent paid by the respondent upto the date when the application under Section 4 was made.  The key

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to  the  resolution of the dispute raised lies in the  words rent  agreed used in Section 4 (2)(b).  In a narrow  sense rent  is understood as the payment agreed to be made to  the landlord by the tenant in consideration for the right to use the rented premises.  The landlord and the tenant agree that the  tenant  will be entitled to occupy and use the  demised premises  at an agreed rent.  Without an agreement as to the rent  payable there no tenancy is created.  This is also how rent  is defined in Section 105 of the Transfer of  Property Act,  1882.   The  element of assent is an integral  to  the concept  of  rent.  If the word rent is given this  narrow meaning  then, as urged by the appellant the latter half  of Section 4(2)(b) would indeed be rendered redundant.  But the Legislature  has used the word agreed in juxtaposition  to rent.   If  the word rent is used in the narrow sense  the word  agreed would be tautologous.  We cannot assume  that the  Legislature has used any word without purpose.  In  our view,  by  using  the words agreed  rent  the  Legislature intended  to indicate that the word rent must be construed in  a  wider  sense  to   include,  apart  from  the  narrow connotation,  any  payment  made for use of land  where  the quantum  may  have been fixed otherwise than  by  agreement. The  definition of the word tenant in Section 2(h) of  the Act  also  makes this clear:  tenant means any  person  by whom  or on whose account rent is payable for a building  or rented  land and includes a tenant continuing in  possession after the termination of his tenancy...

     The  tenancy being terminated the agreement ceases  to operate  as  a  voluntary bilateral transaction.   With  the cesser of the agreed tenancy, the agreement as to rent would also cease.  Nevertheless, under Section 2(h) of the Act the tenant  would  be  liable  statutorily to  make  payment  of rent.   Similarly after fair rent is fixed under Section 4 of  the  Act,  the  rent payable is  not  the  agreed  rent. Therefore for the purpose of determining fair rent Section 4 (2)(b)  draws a distinction between cases where the  parties have  agreed  to  the rent and cases where rent  is  payable otherwise  than by agreement.  In the first case, the agreed rent  is to be taken as the base and the increase determined according  to the formula provided in Section 4(3).  In  the second  case,  the  base is the market rate.   There  is  no warrant  for  drawing  any  distinction  between  a  monthly tenancy  and  tenancies  for  longer  periods.   Nor  is  it necessary  that the agreement should have been entered  into immediately  preceding the date of the application.  Section 4  (2)(b) uses the word preceding without any  limitation. This  may  be  contrasted  with Section  3  where  the  word preceding  is  qualified by the word  immediately.   For fixing  the  basic  rent under Section 4 the  only  question would be - was there a subsisting agreement of tenancy under which  rent was payable when the application for fixation of fair  rent  was filed?  If the answer is in the  affirmative the  agreed  rent must be taken as the basic rent.  If  not, then  the  basic  rent  is   the  prevailing  market   rate. Therefore,  even though the agreement may have been  entered into  in  1976 as is admittedly true in this case,  but  the tenancy  was  continuing until the date of the  application, the  Rent Controller was obliged to take the rate agreed  to in  1976 as the basic rent under the first limb of Section 4 (2)(b).   It  is only after the fair rent is fixed that  the landlord  could  seek  re-fixation  under  the  second  limb subject  to the limitations provided in the Act, as the rent would  then cease to be the agreed rent.  For these reasons, we  uphold  the decision of the High Court and  dismiss  the

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appeal without any order as to costs.