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PETITIONER: MISS LIZA ARULANANDAM

       Vs.

RESPONDENT: SMT. A.S. SULOCHANA

DATE OF JUDGMENT11/09/1990

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. KANIA, M.H. SAIKIA, K.N. (J)

CITATION:  1990 AIR 2289            1990 SCR  Supl. (1) 394  1990 SCC  (4) 701        JT 1991 (5)   228  1990 SCALE  (2)512

ACT:     Constitution   of  India,  1950:  Article   136--Special leave--Findings of facts--Based on consideration of evidence Not to be interfered with.     Tamil Nadu Buildings (Lease and Rent Control) Act, 1960: Section     4--Fixation     of    fair     rent--Cost     of construction--Market  value-Determination  of--As  on  which date.

HEADNOTE:     The  appellant-tenant  was  in occupation  of  a  double storeyed building on a monthly rent of Rs. 170. The respond- ent-landlady  filed  an application under Section 4  of  the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960  for fixation of fair rent. The Rent Controller took note of  the fact  that 1/3rd portion of the building was being used  for residential  purpose and the rest of the building  for  non- residential  purpose, namely, for running a school. He  also appointed an Engineer as Commissioner to evaluate the  total cost  of  the building. The Commissioner adopted  the  rates prevalent  in the Public Works Department and submitted  his report. On the basis of the Commissioner’s report, the  Rent Controller worked out the cost at Rs.1,51,820.  Accordingly, the  fair rent for the said premises was arrived at  Rs.1518 per   month  at  12  per  cent  gross  return.   Since   the respondent-landlady had confined her claim for the  enhance- ment  of  fair rent to Rs.1,O00 only,  the  Rent  Controller fixed  the  fair rent at Rs.1,O00. On appeal, the  order  of Rent Controller was affirmed by the Court of Small Causes.     On  a  revision being preferred, the High  Court  agreed with  the valuation adopted and determined the fair rent  on the  basis that 1/3rd of the premises was used for  residen- tial  purpose and 2/3rd for nonresidential purpose, and,  as per sub-sections (2) and (3) of Section 4 of the Act, worked out  the rent at 9 per cent and 12 per cent respectively  on the  cost of construction arrived at. The High  Court  fixed the  fair  rent at Rs. 1391.67 per month. It  confirmed  the fair  rent of Rs. 1,000 as was fixed by the Rent  Controller and as confined to by the Respondent landlady. This  appeal, by special leave, is against the High  Court’s

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order. It 395 was  contended that the cost of the building and its  market value as worked out was illegal, fallacious and untenable. Dismissing the appeal,     HELD:  1. Section 4 of the Tamil Nadu  Buildings  (Lease and Rent Control) Act, 1960 prescribes the principles on the basis of which the fair rent is to be fixed. In the light of those  principles, the evidence adduced by the  parties  was considered  by the Rent Controller, the appellate court  and the High Court and they found that the fixation of the  fair rent was much in excess of the claim made by the  Respondent landlady.  Since  she  confined her claim  to  Rs.1,O00  per month,  the  courts  below  have  fixed  the  fair  rent  at Rs.1,O00.  Therefore,  on  the findings of  facts  based  on consideration  of the evidence, this court cannot  interfere and  come  to  its own conclusion. The  finding  is  neither vitiated nor illegal warranting interference. [210B-C]     2.1  Sub-section  4  of Section 4 of  the  Act,  clearly indicates that the total cost of construction referred to in sub-sections  (2) and (3) shall consist of the market  value as on the date of application for fixation of the fair rent. [209C]     2.2  It  is  obvious that at the time  when  this  Court rendered its decision in Nambiar’s case there was no  provi- sion  in Section 4 as to the date on which the cost of  con- struction  was  to be determined, and Rule 12  provided  the manner  in  which the fixation of the fair rent  has  to  be made.  The  subsequent amendment brought on the  statute  in 1973, by the Amending Act 23 of 1973, has incorporated  sub- section (4) in Section 4 which amplified the date of  appli- cation  as the starting point to fix market value.  As  such the  fair  rent has been rightly determined  by  the  courts below. [209D-E; HI     K.C.  Nambiar  v.  The IV Judge of the  Court  of  Small Causes, Madras & Ors., [1970] 1 SCR 906, referred to.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2228  of 1982.     From  the Judgment and Order dated the 25.7.1980 of  the Madras High Court in C.R.P. No. 1150 of 1979. Anant Palli and E.C. Agarwala for the Appellant. 396 V. Balachandran and K. Vijay Kumar for the Respondent. The Judgment of the Court was delivered by     K.  RAMASWAMY, J. The appellant/tenant is in  occupation of  a double storeyed building bearing No. 100, Aiya  Mudali Street,  Chintadripet, Mount Road, Madras on a monthly  rent of  Rs.  170. The respondent landlady filed  an  application under  Sec.  4 of the Tamil Nadu Buildings (Lease  and  Rent Control) Act, 18 of 1960 as amended by Act, 23 of 1973,  for short ’the Act’. The Rent Controller fixed the fair rent  at Rs.  1,000 per month. On appeal, the Court of Small  Causes, Madras  and  on further Revision under Sec. 25,  the  Madras High Court confirmed the order. This appeal by special leave has  been at the behest 01’ the tenant. The  admitted  facts are  that  1/3rd portion of the building is being  used  for residential and the rest for non-residential purpose namely, for  running a school. It is of 50 years’ old. Section 4  of the  Act  provides the procedure for fixation  of  the  fair rent, which reads thus: "Fixation of Fair Rent (1) The Controller shall on  applica-

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tion  made by the tenant or the landlord of a  building  and after  holding such enquiry as he thinks fit, fix  the  fair rent for such building in accordance with the principles set out in the following sub-sections. (2) The fair rent for any residential building shall be nine per  cent gross return per annum on the total cost  of  such building. (3) The fair rent for any non-residential building shall  be twelve per cent gross return per annum on the total cost  of such building. (4)  The total cost referred to in sub-section (2) and  sub- section (3) shall consist of the market value of the site in which the building is constructed, the cost of  construction of the building and the cost of provision of any one or more of  the amenities specified in Schedule I as on the date  of application for fixation of fair rent;           Provided  further  that the cost of  provision  of amenities specified in Schedule I shall not exceed-- 397 (i)  in the case of any residential building,  fifteen  per- cent; and (ii) in the case of non-residential building, twentyfive per cent,  of  the cost of site in which the  building  is  con- structed  and  the cost of construction of the  building  as determined under this Section." "5.(a)  The cost of construction of the  building  including cost  of  internal  water-supply,  sanitary  and  electrical installations  shall  be determined with due regard  to  the rates  adopted for the purpose of estimation by  the  Public Works  Department of the Government for the area  concerned. The Controller may, in appropriate cases, allow or  disallow an  amount  not exceeding thirty per  cent  of  construction having regard to the nature of the building. (b)  The Controller shall deduct from the cost of  construc- tion determined in the manner specified in clause (a) depre- ciation, calculated at the rates specified in Schedule II."     A bird’s eye view of Sec. 4 indicates that the  Control- ler  shall hold an enquiry before fixing the fair rent  pre- ceded  by an application made in that behalf either  by  the tenant  or the landlord, in accordance with  the  principles set  out  in  sub-sections 2 to 5 of Sec. 4. In  case  of  a residential  building the fair rent shall be 9 per cent  and for  nonresidential  building 12 per cent gross  return  per annum  on  the total cost of the building in  question.  The total cost shall consist of (a) market value of the site  on which  the  building  is constructed; (b) the  cost  of  the construction of the building; and (c) the cost of  provision of any one or more of the amenities specified in Schedule  I which  shall  not  exceed: (1) in the  case  of  residential building 15 per cent; and (2) in case of any non-residential building  25 per cent of the cost of the site in  which  the building  was constructed as determined under Sec. 4 of  the Act. The cost of the construction of the building would also include  internal  water  supply,  sanitary  and  electrical installations. The estimation of its ratio thereof shall  be as is done by the Public Works Department of the  Government for  the  area concerned. In addition to the  above,  having regard to the nature of the building, the Controller may, in appropriate cases, allow or disallow an amount not exceeding 30%  of construction. The Controller shall also deduct  from the cost of construction determined in the manner  specified in clause (a) of sub- 398 section  5  of Sec. (4) the depreciation calculated  at  the rates  specified  in Schedule II. The determination  of  the

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fair  rent of the building shall be fixed as on the date  of the application filed for fixation of the fair rent.     Section  5 of the Act provides the right for  refixation of  the fair rent under the Act for the  reasons  adumbrated therein with which we are presently not concerned. An  Engi- neer  was appointed as a Commissioner to evaluate the  total cost  of the building, who adopted the rates of  the  Public Works  Department and submitted his report which is  Exhibit P-2.  He  was also examined as a witness. The rates  of  the construction  for terraced building were (a) for the  ground floor  at  Rs.345 per sq. metre and (b) for first  floor  at Rs.320 per sq. metre. As regards the tiled portion, the cost of  construction is Rs.300 per sq. metre. The  parties  also adduced oral evidence. The Rent Controller after  considera- tion  thereof fixed the rates as afore-stated and he  worked out the fair rent on that basis.     The entire ground floor consists of 2927.25 sq. ft.  the area  of  two shops wherein consists of 238.00 sq.  ft.  The built  up  area of the first floor is 3330.75 sq.  ft.,  the tiled portion consists of 237 sq. ft. The cost of  construc- tion was estimated at Rs. 1,99,300. The depreciation @ 1 per cent,  as is first class building, was given. He  added  the market value of the open site at Rs.20,000 and also  annuity on  the vacant portion @ 1 per cent was  added.  Accordingly the Rent Controller worked out the cost at Rs. 1,51,820. The fair rent as non-residential premises, at 12 per cent  gross return, was fixed at Rs. 15 18 per month. Since the respond- ent,  landlady confined to the enhancement of the fair  rent at  Rs.  1,000, it was accordingly fixed. On appeal  it  was affirmed.  In  the revision, the High Court  while  agreeing with  the  valuation adopted, determined fair  rent  on  the basis  that 1/3rd as being used for residential purpose  and 2/3rd for non-residential purpose. On that basis the learned Judge worked out at the rate of 9 per cent and 12% as  adum- brated  in Sec. 4(2) and (3) and fixed the fair rent.  While upholding  the depreciation at 1 per cent it fixed the  fair rent  Rs.1391.67  per month, but affirmed the fair  rent  at Rs.1,O00 per month as was confined to, by the landlady. From this  material matrix the question at issue is  whether  the fixation of the fair rent by the Rent Controller, ultimately affirmed  by the High Court, is illegal. The  contention  of the  learned counsel for the appellant/tenant that the  cost of the building and its market value are illegal, is  falla- cious and untenable. Section 4 not only provides the  proce- dure  but  also the principles and method on  the  basis  of which  the  fair rent is to be determined. The  fixation  of fair rent, therefore, is in consonance with Section 4. We 399 accordingly affirm its legality. Realising this stark reali- ty the counsel laid emphasis that the valuation of the  cost of construction should be as on the date of the construction of  the building and placed strong reliance on K.C.  Nambiar v. The IV Judge of the Court of Small Causes, Madras & Ors., [1970]  1 SCR 906. Therein this Court held that the  expres- sion  ’cost of construction’ means the cost of  construction of the building as originally erected with such additions as may be required to be made for subsequent improvements. Rule 12 which prescribes the rate at which the cost of  construc- tion is to be computed plainly goes beyond the terms of  the section.  Accordingly  this  Court allowed  the  appeal  and determined  the  fair rent as on the basis of  the  cost  of construction.  On that premise the learned counsel  for  the appellant  contended  that calculation of the cost  of  con- struction  to  the residential as  well  as  non-residential building  should be with reference to the date  of  applica-

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tion. We find no substance in the contention. It is  already seen that sub-section 4 of Sec. 4 of the Act, clearly  indi- cates  that  the total cost of construction referred  to  in sub-section 2 and sub-section 3 shall consist of the  market value as on the date of application for fixation of the fair rent.  It is obvious that at the time when this  court  ren- dered the decision in Nambiar’s case there was no  provision in  Sec. 4 as to the date on which the cost of  construction was to be determined, and Rule 12 provided in the manner  in which  the  fixation of the fair rent has to  be  made.  But subsequently  it  was  amended by Amending Act  23  of  1973 incorporating in sub-section (4) of Sec. 4 of the Act as the date of making an application. This is also apparent when we see  Sec.  5 of the Act. Sub-section (3) of Sec.  5  clearly mentions that: "Where  the fair rent of any building has been fixed  before the  date  of the commencement of the  Tamil  Nadu  Building (Lease and Rent Control) Amendment Act, 1973 the Landlord or the  tenant  may apply to the Controller to refix  the  fair rent  in accordance with the provisions of Section 4 and  on such application, the Controller may refix the fair rent.  ’ ’     Thus we are clearly of the view that the ratio in Nambi- ar’s  case no longer would apply. The  subsequent  amendment brought on the statute in 1973, amplified the date of appli- cation  as  the staring point to fix market  value.  On  the basis  of  the valuation of the building  estimated  by  the commissioner as per P.W.D. rates prevailing in the area  and evidence  produced  by the parties, the Rent  controller  as modified by the High Court rightly determined the fair rent. 400     It  is  next contended that the method  adopted  by  the Controller and ultimately upheld by the High Court in fixing the fair rent is not correct. It is contended that the value of  the building has been changing from time to time  as  is reflected  from the evidence on record and the courts  below committed the gravest error in not considering the  evidence in  proper perspective. It is already seen that Sec. 4  pre- scribed  the principles on the basis of which the fair  rent is  to be fixed. In the light of those principles  the  evi- dence adduced by the parties was considered by the  Control- ler, the appellate court and the High Court, found that  the fixation  of  the fair rent is much in excess to  the  claim made by the landlady. Since the landlady confined the  claim for  Rs.  1,000 per month, the courts below have  fixed  the fair rent at Rs. 1,000. Therefore, on the findings of  facts based  on consideration of the evidence, this  Court  cannot interfere and come to its conclusion. Thereby the finding is not vitiated nor illegal warranting interference. The  appeal  is accordingly dismissed with costs,  fixed  at Rs  .5,000. G.N.                            Appeal dismissed. ?401