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PETITIONER: MIRAN DEVI

       Vs.

RESPONDENT: BIRBAL DASS

DATE OF JUDGMENT27/07/1977

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. FAZALALI, SYED MURTAZA

CITATION:  1977 AIR 2191            1978 SCR  (1) 188  1977 SCC  (3) 496

ACT: East Punjab Urban Rent Restriction Act, 1949, s. 4 (2)  (a), interpretation   of-"In  similar   circumstances",   whether governs both "same" and "similar accommodation"-Rate of rent prevailing  prior to 1st January, 1939, when can form  basis for  fixation  of  basic rent-Development  of  locality  and general  increase  in size and prosperity of  town,  whether constitute a change of circumstances.

HEADNOTE: In  1962, the respondent Birbal Dass took a shop on rent  of Rs.  175/-  per month, plus the taxes, from  the  appellant. Five years later, he applied u/s. 4 of the East Punjab Urban Rent Restriction Act, 1949, for the fixation of fair rent of the  building.   The  Rent  Controller  found  the  evidence adduced  by  Birbal Dass insufficient for fixing  the  basic rent  u/s.  4(2)  of  the Act,  and  therefore,  upheld  the contractual  rate  plus Rs. 10.15 paise  per  month  towards taxes.  The District Judge allowed his appeal and fixed  Rs. 4.50  paise per month as the fair rent payable by him.   The High Court dismissed the appellant’s revision application. In  this  appeal by special leave, the  Court  examined  the language  of  s.  4(2)(a),  for  determining,  firstly,  the prerequisite  conditions for its application,  and  secondly whether  the phrase "in similar circumstances" governs  both expressions namely, "the same" and "similar accommodation". Dismissing the appeal, the Court, HELD  : (1) The phrase "in similar circumstances"  occurring in  s. 4(2)(a), qualifies and governs both the  expressions, namely,   "the  same"  and  "similar   accommodation".   The prevailing rate payable for the same building before the 1st January, 1939can  form  the basis of the fixation  of  the basic rent only when the same buildingwas in existence  in similar circumstances during that period. Identical will  be the  position with reference to the prevailing rate of  rent for similar accommodation. [190 B-C] (2)The  development of the locality would be a  change  in the   circumstances  so  will  be  if  there  has  been   an appreciable  and substantial development of the premises  or the  building by alterations or new constructions after  the 1st  January,  1939.   A general increase in  the  size  and prosperity  of the town will not be sufficient to  take  the

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case out of the ambit of s. 4(2) (a). [190 E-F] Channan  Singh  v. Seva Ram, 68, Punjab  Law  Reporter  335, approved. The Court observed : A  general  prosperity  and increase in  the  population  of almost  each  and  every  town in our  country  has  led  to substantial  increase  in  the  rate  of  rent  due  to  the increased    demands   over-stepping    the    corresponding availability  of  the buildings.  In order  to  prevent  the charging  of  exorbitant  rent  in  such  a  situation,  the legislature has provided for a restriction in the demand for increased rent. [190 F-H]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1984  of 1969. Appeal  by Special Leave from the Judgment and  Order  dated 11-4-1969  of  the Punjab and Haryana High  Court  in  Civil Revision No. 120 of 1969. V.   C. Mahajan and Miss Kamlesh Bansal for the Appellant. B.   D. Sharma for the Respondent. 189 The Judgment of the Court was delivered by UNTWALIA, J.-This is an appeal by special leave by the  land lady  of  a shop situated in Timber market in  the  town  of Hissar in the State of Haryana.  Respondent took the shop on rent  of Rs. 175/per month plus the taxes on the basis of  a Rent  Note  executed by him in favour of  the  appellant  on November  2,  1962.   On  November 24,  1967,  he  filed  an application  under section 4 of the East Punjab  Urban  Rent Restriction  Act,  1949-hereinafter  called  the  Act,   for fixation of the fair rent of the building.  The Senior  Sub- Judge,  Hissar acting as the Rent Controller under the  Act, found the evidence adduced by the respondent insufficient to enable  him  to fix the basic rent  under  subsection(2)  of section 4 of the Act.  In that view of the matter, he upheld the  contractual  rate of rent of Rs. 175/-  per  month  and adding to that Rs. 10.15 paise on ’account of tax fixed  the fair  rent at Rs. 185.15 per month.  The respondent went  up in appeal before the District Judge, Hissar who by his order dated January 16, 1969 allowed the appeal and fixed Rs. 54/- per  annum i.e. Rs. 4.50 per month as the fair rent  of  the building.  The appellant’s revision before  the High  ,Court was dismissed on April 11, 1969.  Hence this appeal. Mr.  V.  C.  Mahajan,  learned  counsel  for  the  appellant submitted that the town of Hissar and the locality where the shop  its  situated  had ,considerably  improved  after  1st January, 1939.  Material improvements were made in the  shop premises after that date.  The improved structures,  counsel submitted, which were standing when the shop was let out  on rent  were not there in the year 1938.  In that view of  the matter it could not be held that the prevailing rate of rent in  the  locality  for the same  or  similar  accommodation during  the  12  months prior to the 1st  January,  1939  in similar  circumstances was Rs. 3/- per month as  erroneously held  by the District Judge under clause (a) of  sub-section (2)  of  section 4 of the Act.  Mr. B.  D.  Sharma,  learned counsel for the respondent, however, submitted that the rent had  been fixed taking into account the prevailing rate  for the  same  shop  which  was in  existence  before the  1st January,  1939.   The  phrase  "in  similar   circumstances" occurring in clause (a) governs only "similar accommodation" and not the word "same".  Mr. Sharma further submitted  that

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even  assuming to be otherwise, the learned  District  Judge had  arrived  at a finding of fact on appreciation  of  the entire   materials  in  the  records  of  this   case,   the circumstances  prevailing at the time of the making  of  the application by the respondent for fixation of fair rent were similar  to those prevailing before the 1st  January,  1939. The  finding of fact arrived at by the District Judge  could not  be  and has not been ’interfered by the High  Court  in revision.  There is no such error of law in the judgments of the  either  of the Courts below which  would  justify  this Court’s arriving at a different conclusion. We  shall  read the relevant portion of sub-section  (2)  of section 4 of the Act.  It says : "In  determining  the  fair rent  under  this  section,  the Controller  shall  first  fix  a  basic  rent  taking   into consideration-               (a)   the  prevailing  rates of  rent  in  the               locality for the same or similar accommodation               in  similar  circumstances during  the  twelve               months prior to the 1st January, 1939; and               190               (b)   the  rental  value of such  building  or               rented   land  if  entered  in  property   tax               assessment register of the municipal, town  or               notified area committee, cantonment board,  as               the  case  may  be,  relating  to  the  period               mentioned in clause (a)". Clause  (b)  admittedly was not applicable to this  case  as there  was  no  property tax assessed  in  respect  of  this building  prior to the 1st January, 1939.  The decision  and the case of fixation of the basic rent had to be judged with reference to clause (a) only.  In our opinion the phrase "in similar  circumstances" occurring in the said clause  quali- fies  and governs both the expressions, namely,  "the  same" and "similar accommodation".  For arriving at the figure  of basic  rent the prevailing rate of rent in the locality  for the  same  building  has got to  be  determined.   But  such prevailing rate payable for the same building before the 1st January,  1939  can form the basis of the  fixation  of  the basic  rent only when the same building was in existence  in similar circumstances during that period.  Identical will be the  position with reference to the prevailing rate of  rent for similar accommodation. The  Full Bench of the Punjab High Court has pointed out  in Chanan  Singh v. Sewa Ram(1) that a change in the  character of  a  locality  from  undeveloped  to  developed  one  will constitute  a  change of circumstances.  It  had  also  been observed by Falshaw, C.J. in his judgment at page 340 :               "I should certainly not be prepared to  extend               the  meaning in this context further than  the               above, and to hold that a general increase  in               the  size and prosperity of the town could  be               ’taken  into  account where  the  locality  in               question still remains much as it was in  1938               whether  it  was a predominantly  shopping  or               residential centre." We would add that the development of the locality would  un- doubtedly  be a change in the circumstances and it would  be so  if  there  has  been  an  appreciable  and   substantial development  of the premises or the building by  alterations or new constructions after the 1st January, 1939.  A general increase in the size and prosperity of the town will not be, sufficient to take the case out of the ambit of clause  (a). The  purpose and the intention of the Legislature is not  to permit  a  landlord  to  charge  any  fabulously   increased

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existing  rate  as compared to the rate of  rent  prevailing before the 1st January, 1939 merely because there has been a general  prosperity  of  the  town  where  the  building  is situated.   It is a matter of common experience that due  to the increase in the population, development and  advancement of  the country as a whole, and several such  factors  there has   been  a  general  prosperity  and  increase  in   ’the population  of  almost each and every town in  our  country, leading  to substantial increase in the rate of rent due  to the   increased  demands  over-stepping  the   corresponding availability  of  the  buildings.   It  is  to  prevent  the charging  of  exorbitant  rent  in  such  a  situation   the legislature, in its wisdom, thought it expedient to  provide for a restriction in the demand for (1)  68 Punjab Law Reporter 335. 191 increased  rent.  If the, building is a developed one,  made so   by   substantial   alterations,   additions   or    new constructions then the fixation of fair rent under section 4 may  have  to be made on different considerations.   But  if there  has  been  no  development of  the  locality  or  the building  since  after  the  1st  January,  1939  then   the prevailing   rate   of  rent  for  the   same   or   similar accommodation as was there before the 1st January, 1939 will have ’to be taken into account in fixing the fair rent. Mr.  Mahajan  took  us  to the Rent  Note  executed  by  the respondent,  the spot inspection report dated  11.5.1967  of the  then  Sub-Judge, Hissar, and other relevant  pieces  of evidence.   He submitted that the Rent Controller was  right in  his view that the evidence on both the  relevant  points under clause (a) was missing and in absence of such evidence he  was justified in upholding the agreed rate of rent.   We have  given  due consideration to the matter  after  careful perusal  of  all the three judgments, namely, those  of  the Rent Controller, the District Judge and the High Court.   We have  also perused with care the evidence and the  materials which  were placed before us on behalf of the  parties.   We felt  constrained to do so especially in this case,  as  the fair  rent fixed by the District Judge from the date of  the filing   of  the  application  by  the  respondent  was   so shockingly  low as compared to the agreed rate of rent  that apparently it appeared that great injustice had been done to the  land-lady.  On the other hand, the agreed rate of  rent on  the facts and in the circumstances of the case  appeared to be exorbitantly high.  It was not possible in the  teeth, of  the  law which is engrafted in section 4 of the  Act  to strike  a  mean and make any other kind of  just  or  proper order.   Ultimately  we felt constrained to  arrive  at  the conclusion,  though somewhat reluctantly  and  hesitatingly, ’that the findings of fact arrived at by the District  Judge as  affirmed  by  the  High Court do  not  suffer  from  any infirmity  of law to enable us to interfere with his  order. On  appreciation of the evidence adduced by  the  respondent and believing it the ’finding recorded by the District Judge is  that  the  respondent  had  succeeded  in  proving   the prevailing  rate of rent of the demised premises to  be  Rs. 36/- per annum and it was so in similar circumstances during the  year  1938.   Over the said  prevailing  rate,  he  has allowed  the increase of 50% in accordance with  sub-section (5) of section 4 of the Act.  The High Court in revision has affirmed the decision of the District Judge on the  question of fixation of basic rent.  We do not find any justification to interfere with it.  We would, however, change the date of fixation  of  fair rent payable by the  respondent  ’to  the appellant.   Although, in terms, the fourth section  of  the

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Act  does not say as to from which date the fair rent  fixed has  to come in force, ordinarily and generally if is to  be from  the  date,  of  the application.   But  there  may  be circumstances  justifying the fixation of another date.   We think there are special circumstances existing in this case. The Rent Controller had upheld the agreed rate of rent.  The District  Judge fixed the fair rent in his  appellate  order passed  on January 16, 1969.  We think in the  circumstances of  this  case the date of the order of the  District  Judge would be an appropriate one for enforcement of the fair rent as fixed by him.  We, accordingly, modify the order to this 19 2 extent  only that the fair rent fixed by the District  Judge will  be effective not from the date of the application  but from  the date of the appellate order of the District  Judge Subject  to  this  modification, the  appeal  fails  and  is dismissed, but in the circumstances without costs. M.R.                                    Appeal dismissed. -722SCI/77-2,500-6.1.78-GIPF. 193