REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO._____ OF 2010 (Arising out of SLP (C) No.31164/2008)

Mrs. Zakiya Begum & Ors.      ...Appellants

- Versus -

Mrs. Shanaz Ali & Ors.             ...Respondents

J U D G M E N T GANGULY, J.

1. Leave granted.

2. In this appeal the judgment and order dated  12.11.2007 of a learned Single Judge of the  

High  Court  of  Karnataka  in  revisional  

jurisdiction in H.R.R.P. No. 60 of 2007, under  

Section 46 (1) of the Karnataka Rent Act, 1999  

has been impugned.

3. The  revisional  petition  was  filed  by  Mrs.  

Zakiya  Begum  and  two  others  assailing  the  

order dated 18.1.2007, passed by the Learned  

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XVth Additional Small Causes Judge, Mayo Hall  

Unit, Bangalore on I.A. No. 8/2006 filed by  

the tenants, respondents herein.

4. The material facts are that the appellants are  

the  landlords  of  the  property  bearing  No.  

28/1, Robertson Road, Frazer Town, Bangalore –  

5, measuring 43 feet North, South 37 feet 9  

inches, East 25 feet and West 25 feet, the  

property included 6 feet wide passage leaving  

from  Robertson  Road  into  the  scheduled  

premises (herein after referred to as the said  

‘premises’). The appellants became the owner  

of the scheduled premises by virtue of a Gift  

Deed dated 30.3.2000 executed by the husband  

of  appellant  No.  1  and  the  father  of  

appellants No. 2 and 3.

5. The  appellants  inducted  the  respondents  as  

tenants on a monthly rent of Rs.4000/- (Four  

Thousand  Only)  per  month  in  respect  of  the  

said  premises.  The  rent  was  agreed  in  

accordance with clause 4 of the rent agreement  

dated 06.11.1997.  

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6. On or about 21.3.01 the appellants instituted  

an  eviction  proceeding  being  H.R.C.  No.  

10042/2001  against  the  respondents  under  

Section 21 (1) (h) and (f) of Karnataka Rent  

Control  Act,  1961  (herein  after  “the  1961  

Act”), inter alia, on the grounds of default,  

subletting,  reasonable  and  bonafide  

requirements and some other grounds.

7. In  the  said  eviction  proceeding,  the  

respondents filed an IA being, IA 8 of 2006,  

wherein  it  was  contended  by  the  respondents  

that  during  the  pendency  of  the  eviction  

proceeding, under Section 21(h)(f) of the 1961  

Act,  Karnataka  Rent  Act  1999  (herein  after,  

“1999  Rent  Act”)  has  come  into  effect  

repealing  the  1961  Act  and  it  was  further  

contended  that  the  eviction  proceeding  will  

have to be dealt with under the provisions of  

the 1999 Rent Act. The appellants also amended  

their eviction proceedings in accordance with  

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the  1999  Rent  Act  and  the  respondents  gave  

their objections to the same.

8. The main objection of the respondents in IA 8  

is  that  admittedly  they  are  tenants  on  a  

monthly rental of Rs.4000/- and as such the  

eviction  proceeding  is  not  maintainable  in  

respect of the premises under the 1999 Rent  

Act as the same is not applicable to premises  

where the monthly rental exceeds Rs.3500/-. It  

was, therefore, urged that the Court of Small  

Causes  has  no  jurisdiction  to  try  the  said  

eviction proceeding as the 1999 Rent Act does  

not apply.

9. By an Order dated 18.01.2007 the Court of XVth  

Additional  Small  Causes  Judge,  inter  alia,  

held that “since the monthly rent of scheduled  

premises  exceeds  Rs.3500/-,  hence  the  

Karnataka Rent Act, 1999 is not applicable and  

this Court has no jurisdiction to try the case  

and  the  petition  is  not  maintainable  before  

this court”. Saying so,   IA 8 was allowed by  

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the XVth Additional Judge of the Small Causes  

Court.  

10. That led the appellants to challenge the said  

order  of  the  Small  Causes  Court  before  the  

High Court.  

11. It may be noted that neither before the High  

Court nor before this Court the applicability  

of the 1999 Rent Act, which came into effect  

in  November  2001,  was  questioned  by  the  

appellants.  Rather  acknowledging  its  

applicability  to  the  pending  eviction  

proceeding the appellant amended the same in  

accordance with the 1999 Rent Act.

12. It is very clear from Section 70 of the 1999  

Rent  Act  that  unless  proceedings  initiated  

under the 1961 Act has reached the stage of  

execution of a decree, 1961 Act will have no  

application  to  other  eviction  proceedings  

which  are  pending,  prior  to  the  execution  

stage, on the date of coming into effect of  

the 1999 Rent Act.

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13. The  provisions  of  repeal  and  savings  under  

Section 70 of the 1999 Rent Act, particularly  

provisions of Section 70(1) and (2) are set  

out below:

“70. Repeal and Savings.-  (1)    The  Karnataka  Rent  Control  Act,  1961  (Karnataka  Act  22  of  1961)  is  hereby  repealed. (2) Notwithstanding  such  repeal  and  subject  to  the  provisions  of  section  69,- (a) all proceedings in execution of any  decree  or  order  passed  under  the  repealed  Act,  and  pending  at  the  commencement of this Act, in any Court  shall be continued and disposed off by  such Court as if the said enactment had  not been repealed; (b) all  cases  and  proceedings  other  than  those  referred  to  in  clause  (a)  pending at the commencement of this Act  before  the  Controller,  Deputy  Commissioner,  Divisional  Commissioner,  Court, District Judge or the High Court  or other authority, as the case may be  in  respect  of  the  premises  to  which  this Act applies shall be continued and  disposed off by such Controller, Deputy  Commissioner,  Divisional  Commissioner,  Court, District Judge or the High Court  or other authority in accordance with  the provisions of this Act. (c) all  other  cases  and  proceedings  pending in respect of premises to which  this Act does not apply shall as from  the  date  of  commencement  of  the  Act  stand abated.”  

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14. The learned counsel for the appellants urged  

that  in  view  of  the  provisions  of  Section  

2(3)(e)(i) of the 1999 Rent Act, the decision  

of the Small Causes Court is bad in law and  

cannot be sustained.  

15. In order to appreciate these controversies the  

relevant Section is set out below.

“2(3)  Nothing  contained  in  this  Act  shall apply,-   (a) xxx   (b) xxx   (c) xxx   (d) xxx   (e) to any premises, deemed rent on  the date of commencement of this Act or  the standard rent of which exceeds,-

(i) three  thousand  five  hundred  rupees  per  month  in  any  area  referred to in Part A of the  first schedule; and

(ii) xxx”

16. The  learned  counsel  for  the  appellants  

submitted  that  the  non-applicability  of  the  

1999 Rent Act is only on the basis if in the  

tenanted  premises  the  deemed  rent  or  the  

standard rent exceeds Rs.3500/- on the date of  

commencement of the new Act of 1999 Rent Act.  

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It was urged that such standard rent is one  

which is fixed under Section 7 of the Act and  

it was argued that merely because the agreed  

rent is Rs.4000/- per month in respect of the  

schedule  premises,  the  Small  Causes  Court  

should not have allowed the application of the  

tenant.  

17. In  order  to  decide  this  controversy,  the  

provisions of Sections 6 and 7 of the 1999 Act  

are to be taken into consideration. Provision  

of  Sections  6  and  relevant  provisions  of  

Section 7 of the said Act are set out below.

“6. Rent payable.- (1) The rent payable  in relation to a premises shall be,- (a) the  rent  agreed  to  between  the  landlord and the tenant as enhanced in  the  manner  provided  in  the  Third  Schedule; or  (b) the standard rent specified under  section 7, as revised under section 9. (2) In the case of a tenancy entered  into  before  the  commencement  of  this  Act,  the  landlord  may,  by  notice  in  writing  to  the  tenant  within  three  months  from  the  date  of  such  commencement,  enhance  the  rent  as  specified under section 7, and the rent  so enhanced, shall be payable from the  date of such commencement.

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7. Standard rent.- (1) Standard rent  in relation to any premises, shall be  the rent calculated on the basis of ten  per  cent  per  annum  of  the  aggregate  amount of the cost of construction and  the market price of the land comprised  in  the  premises  on  the  date  of  commencement of the construction:

Provided  that  the  standard  rent  calculated  as  aforesaid  shall  be  enhanced in the manner provided in the  Third Schedule.

(2) For  the  purpose  of  this  section,-

(a) cost  of  construction  shall  include  cost  of  electrical  fittings,  water  pumps,  overhead  tanks,  storage  tank  and  other  water, sewerage and other fixtures  and  fittings  affixed  in  the  premises;

(b) in  case  any  fixture  and  fittings referred to in clause (a)  are in common use by more than one  occupant  in  a  building,  such  proportion of cost of the fixtures  equipment  and  fittings  shall  be  included  in  the  cost  of  construction  of  the  premises  as  bears proportion to the plinth area  of such premises to the plinth area  of that building;

(c) the cost of construction shall  be  the  actual  amount  spent  on  construction, and in a case where  such amount cannot be ascertained,  such  cost  shall  be  determined  as  per  the  scheduled  rates  of  the  State  Public  Works  Department  for  cost  of  construction  for  similar  

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construction for the year in which  the premises was constructed;

(d) the  market  price  of  the  land  shall be the price for which the  land was bought as determined from  the deed of sale registered under  the Registration Act, 1908 (Central  Act  16  of  1908),  if  construction  commenced  in  the  year  of  registration  or  the  land  rates  notified by the State Government or  a local authority for the year in  which  construction  was  commenced,  whichever is higher;

(e) the  land  comprised  in  the  premises shall be the plinth area  of  the  building  and  such  of  the  vacant land up to fifty per cent,  of  the  plinth  area  as  is  appurtenant thereto; (f) in  a  case  where  a  premises  forms  part  of  a  building  having  more  than  one  premises,  such  proportion of price of land forming  part  of  such  building  shall  be  taken to be the market price of the  land comprised in the premises as  is equal to the proportion of the  plinth area of such premises to the  plinth area of that building;

(g) notwithstanding  anything  contained in clauses (c) and (d),  the  cost  of  construction  and  the  market price of the land comprised  in the premises purchased from or  allotted  by  the  Government  or  a  local  authority  shall  be  the  aggregate  amount  payable  to  such  Government  or  the  local  authority  for the premises:

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Provided  that  the  Controller  may,  for  the  purpose  of  arriving  at,  the  cost  of  construction  and  the  market  price  of  the  land  comprised in the premises, allow in  addition, subject to a maximum of  thirty per cent of amount payable  to  the  Government  or  the  local  authority, to the amount so payable  for any expenditure incurred by the  landlord  or  by  the  first  or  any  subsequent  purchaser  or  allottee  for  any  improvement,  addition  or  structural  alteration  in  the  premises.”  

18. The  Hon’ble  High  Court  did  not  accept  the  

contention of the appellants and dismissed the  

revision petition filed by the appellants.

19. We are also inclined to agree with the view  

taken  by  the  Hon’ble  High  Court  for  the  

reasons indicated below.

20. The 1999 Rent Act (Karnataka Act 34 of 2001)  

was brought into existence to remedy problems  

of urbanisation and to give protection of this  

only to certain categories of tenants and in  

respect  of  some  kinds  of  tenanted  premises.  

Before enacting this law, recommendations of  

Economic Administration Reforms Commission and  

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the National Commission on Urbanisation were  

considered.    

21. On  the  recommendations  of  those  two  

commissions, this new legislation was brought  

in  to  balance  the  interests  of  both  the  

landlord and the tenant and the new law was to  

provide for regulation of rent and eviction in  

the  spirit  of  modern  economy  and  it  was  

designed to replace the 1961 Rent Act.

22. From the statement of objects and reasons some  

of  the  features  of  the  1999  Rent  Act  are  

clear.  The  application  of  the  Act  is  

restricted to,-

(i) to any residential building the  Standard rent of which does not  exceed rupees 3,500 per month  in  the  areas  covered  by  Karnataka Municipal Corporation  Act, 1976 and rupees 2,000 per  month  in  other  areas  and  a  commercial  building  having  plinth area of not exceeding 14  square meter.

(ii) to  buildings  which  are  more  than 15 years old.

(2) The Rent Deed is required to be  in writing and registered.

(3) Tenancy is made inheritable to  a limited extent.

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(4) Provision is made,- (a) for collection of standard rent  

in relation to the investment  on property and for enhancement  of rent, and for determination  of  Standard  Rent  by  Rent  Controller;

(b) for  registration  of  middlemen  and estate agents;

(c) for  adjudication  of  eviction  application  by  Rent  Courts,  with  only  Right  of  Revision,  but no appeal;

(d) for  immediate  eviction  of  tenants  of  State  or  Central  Government  Employees,  members  of  Armed  Forces,  widows,  handicapped persons and persons  above the age of 65 years under  certain circumstances;

(e) to  laydown  Special  Procedure  for trial of cases before the  controllers and also the Courts  so  as  to  achieve  quick  disposals  and  negotiated  settlement.

(f) to  impose  certain  Special  obligations  on  the  landlords  and tenants, etc.”

23. Therefore  1999  Rent  Act  is  a  socio-economic  

legislative  measure  and  is  designed  to  give  

protection  to  certain  classes  of  tenants.  A  

tenant who is paying deemed rent or standard  

rent  above  Rs.3500/-  in  respect  of  his  

tenanted premises on the day of commencement  

of the new Act is outside the purview of the  

Act.

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24. Under  Section  6  of  the  Act,  set  out  

hereinabove,  rent  payable  in  respect  to  the  

premises  is  the  rent  agreed  between  the  

landlord and tenant as enhanced in the manner  

provided in the Third Schedule or the standard  

rent as specified under Section 7 and revised  

under  Section 9.  

25. Insofar  as  deemed  rent  on  the  date  of  

commencement of the Act is concerned, the same  

has  been  explained  under  Explanation  to  

Section 2(3)(e) which is set out below.

“Explanation.- “Deemed  rent  on  the  date  of  commencement  of  this  Act”  shall be the rent calculated in the  manner  provided  in  section  7,  together  with  revision,  if  any,  as  provided in section 9 and decreased  in the case of premises constructed  after the commencement of this Act at  the  same  rate  as  the  rate  of  enhancement  stipulated  in  the  third  Schedule to reflect the position on  the date of commencement of this Act”  

26. A perusal of the said Explanation would show  

that the deemed rent refers to Sections 7 and  

9 of 1999 Rent Act.

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27. In  the  instant  case,  the  agreed  rent  is  

Rs.4000/- which comes within the definition of  

Section  6(1)(a)  and  the  said  agreement  was  

admittedly entered into between the appellants  

and respondents prior to the commencement of  

the 1999 Rent Act.

28. In a case where there is an admitted agreed  

rent,  the  question  of  fixation  of  standard  

rent does not arise.

29. An explanation to a Section should normally be  

read  to  “harmonise  with  and  clear  up  any  

ambiguity  in  the  main  Section”  and  normally  

not  to  widen  its  ambit.  (See  Bihta  Co- operative Development and Cane Marketing Union  Ltd., and another vs. Bank of Bihar and others  - AIR 1967 SC 389 at page 393 and M/s. Oblum  Electrical Industries Pvt. Ltd., Hyderabad vs.  Collector  of  Customs,  Bombay -  AIR  1997  SC  3467 at page 3471).  

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30. In the instant case the agreed rent is the  

deemed rent since there is no dispute about  

the quantum of agreed rent before the coming  

into force of this Act.  

31. For the reasons aforesaid, this Court does not  

find any error in the reasoning of the High  

Court and the appeal is accordingly dismissed.  

No order as to costs.

.....................J. (G.S. SINGHVI)

 .....................J. (ASOK KUMAR GANGULY)

New Delhi August 09, 2010

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