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Voora Mahalakshmamma v. C. Veera Reddy
Factual and Procedural Background
This Revision petition challenges the appellate judgment and decree dated 24.7.1986 in R.C.A. No. 50 of 1986 from the Court of Small Causes, Madras (Appellate Authority). The petitioner is the landlady of premises at No. 29, Varada Muthiappan Street, George Town, Madras-1. A portion of the building (the first floor) had been let to the respondent at a monthly rent of Rs. 340/-. The landlady applied under Section 4(4) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 for fixation of fair rent, claiming Rs. 868/-.
The Rent Controller, by order dated 8.4.1985, fixed the fair rent at Rs. 353/-. The landlady appealed in R.C.A. No. 50/1986 and the appellate authority enhanced the rent to Rs. 365/- per month by its order dated 24.7.1986. The landlady filed the present Revision petition impugning the appellate order.
Legal Issues Presented
- Whether, for the purpose of fixing fair rent under Section 4(4) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, the market value and cost of construction should be assessed with reference to the entire building or only that part of the building (a separately let part) for which fixation is sought.
- Whether depreciation (as per Schedule II) should be calculated having regard to the age of the part of the building (first floor) when different parts of the building were constructed on different dates.
- Whether additional evidence (specifically a subsequent municipal assessment dated 19.11.1993) can be permitted to be filed and admitted at the stage of revision.
Arguments of the Parties
Petitioner (Landlady) — Main Arguments
- The Rent Controller and the Appellate Authority wrongly treated “building” to mean the entire building for valuation under Section 4(4) instead of applying the statutory definition in Section 2(2) which includes "part of a building". Therefore, only the relevant part (the first floor) should have been taken into account for market value and cost of construction.
- It is an admitted fact that the first floor was constructed in August 1978 while the ground floor was constructed over 25 years earlier; accordingly the petitioner was entitled to depreciation for five years as per Schedule II, and she herself had claimed depreciation at the rate of 5%.
- The petitioner sought to place fresh evidence before the Court in the form of an assessment order dated 19.11.1993 (C.M.P. No. 1956 of 1994), arguing Section 25 of the Act allows additional evidence even at the revision stage.
Respondent (Tenant) — Main Arguments
- The market value calculation carried out by the Rent Controller and the Appellate Authority was correct and the market value ought to be considered for the entire building irrespective of the dates when different floors were constructed.
- The respondent objected to the admission of additional evidence at the revision stage and contended that no additional evidence should be permitted at that stage.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sivagananam v. Everest Boarding and Lodging (1969 (1) M.L.J. 101 = (1968) 81 L.W. 641) | Held that where part(s) of a building fall outside the purview of the Act, the Rent Controller may, as an ancillary matter, value the entire building (including portions outside the Act) so as to fix fair rent for that part within the Act's purview. | The court considered this authority but distinguished it. It held the ruling does not apply to the present facts because, in the present case, different parts were constructed on different dates and the application before the Rent Controller was specifically for the first floor; therefore only the cost of construction of the first floor should be taken into account under the statutory definition of "building". |
| Variety Emporium v. V.R.M. Mohd. Ibrahim Naina (1985 (I) M.L.J. (S.C.) 1) | Recognized that courts must have regard to events as they stand when the Court is hearing the proceeding and mould relief in light of those events; a higher court may consider subsequent events occurring during the progression of proceedings. | The court cited this decision (which itself cites Hasmat Rai) to state the general principle that subsequent events may be considered. However, the court held that Section 4(4) of the Act requires fixation of fair rent as on the date of application, and therefore the subsequent municipal assessment (dated 29.11.1993) could not be used to fix fair rent. |
| Hasmat Rai v. Raghunath Prasad (1981 3 S.C.C. 103; A.I.R. 1981 S.C. 1711) | Ratio: in proceedings for eviction on ground of personal requirement, the landlord's need must exist at the date of appellate decree or final disposal; subsequent events during passage of proceedings can be shown and may affect the decree unless the decree has become final. | Quoted within the Variety Emporium passage and relied upon for the broader proposition that subsequent events may be relevant in appropriate contexts. The court accepted the general proposition but held it did not permit reliance upon a later municipal assessment to alter the fair-rent calculation that statute requires to be fixed as of the application date. |
Court's Reasoning and Analysis
The court undertook a statutory construction exercise focused on Section 4(4) and the definition of "building" in Section 2(2) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Section 4(4) prescribes that the "total cost" for fixation of fair rent comprises the market value of the site in which the building is constructed, the cost of construction of the building, and the cost of specified amenities, all "as on the date of application for fixation of the fair rent."
The court accepted the petitioner's submission that the term "building" must be understood in the statutory sense provided by Section 2(2), which explicitly includes a "part of a building." On the facts, the application before the Rent Controller was limited to the first floor, which was constructed in August 1978, whereas the ground floor was constructed over 25 years earlier. Consequently, for the purpose of assessing market value and cost of construction under Section 4(4), the court held that only the first floor's construction cost and its age should be taken into account (i.e., treat the first floor as the "building" in question).
The respondent relied on Sivagananam to argue for valuation of the entire building. The court analysed Sivagananam and found it distinguishable: that case dealt with parts of a building being outside the Act and permitted ancillary valuation of the whole; but the present case involves different construction dates for different parts that are otherwise within the Act's scope and the application was for a part (first floor) only. Therefore Sivagananam did not apply.
On the question of subsequent evidence, the petitioner sought to place a municipal assessment dated 19.11.1993 before the court (C.M.P No. 1956 of 1994). The respondent objected and the court held that additional evidence cannot be admitted at the revision stage. The court acknowledged that Section 25 of the Act has wider wording than Section 115 of the Civil Procedure Code, but nonetheless concluded the established rule precludes letting in fresh evidence on revision; accordingly, the C.M.P. seeking to admit that evidence was dismissed.
The court also considered the broader principle (drawn from Variety Emporium and Hasmat Rai) that courts in appropriate cases should consider events as they present themselves when hearing a matter. However, the court read this principle together with the specific statutory mandate of Section 4(4) which requires fixation of fair rent with reference to the date of application; therefore a subsequent municipal assessment could not be used to re-fix the market value for fair rent purposes.
Holding and Implications
Primary Holding: The Revision petition is allowed to the limited extent set out in the order: the matter is remitted to the Rent Controller for reassessment of fair rent only for the purpose of calculating depreciation under Schedule II taking the age of the first floor as five years (date of construction August 1978). The Rent Controller is directed to assess the quantum of rent consistent with that determination without permitting either party to lead fresh evidence.
Orders on Additional Evidence: The petition to admit additional evidence (C.M.P. No. 1956 of 1994, as argued by the petitioner) was dismissed. The opinion later records at its conclusion that "C.M.P No. 1956/1992 is dismissed." (Both references appear in the text as the Court's dismissal of the petition to admit additional evidence; the opinion contains both the "1994" and "1992" citations as they appear in the source document.)
Implications:
- The direct effect is that the Rent Controller must re-calculate the fair rent only to the limited extent of applying depreciation under Schedule II based on the first floor's five-year age; the rest of the appellate determination stands subject to this limited modification.
- No fresh evidence may be admitted at revision; the court declined to permit the municipal assessment dated 19.11.1993 to be used to alter the fair-rent calculation which must be made as on the date of the original application.
- The court did not purport to lay down any general new precedent beyond applying statutory definitions and established principles about admissibility of evidence at revision; it remitted the matter for limited reassessment without ordering costs ("there shall be no order as to costs").
RR/VCS (as signed in the opinion)
This Revision petition is filed against the judgment and decree dated 24.7.1986 made in R.C.A No. 50 of 1986 on the file of the VIII Judge, (Appellate Authority) Court of Small Causes, Madras.
2. The landlady is the petitioner. The landlady filed an application under Section 4(4; of the Tamil Nadu Buildings (Lease and Rent Control Act, 1960 for fixation of fair rent, in relation to a portion of the building (First Floor) of No. 29, Varada Muthiappan Street, George Town, Madras-1 which was let out to the respondent on a monthly rent of Rs. 340/-. The petitioner landlady claimed Rs. 868/- as a fair rent. The respondent-tenant opposed the petitioner on several grounds and the Rent Controller fixed the fair rent as Rs. 353/- by his order dated 8.4.1985 Aggrieved by the said order of the Rent Controller, the land lady filed the appeal R.C.A No. 50/1986 and in that appeal the rent was enhanced to Rs. 365/- per month.
3. Aggrieved by the appellate order dated 24.7.1986 made in R.C.A No. 50/1986, the petitioner-landlady has preferred this Revision petition.
4. It is contended by the learned counsel for the petitioner that the Rent Controller as well as the Appellate ate authority, have erred in fixation of quantum of fair rent under Section 4(4) of the Tamil Nadu Buildings (Lease and Rent Control)Act, 1960, (hereinafter referred to as the Act). The learned counsel for the petitioner in particular, referred to Section 4(4) of the Act, which is as follows:—
“4(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 the fair rent;
Provided that while calculating the market value of the site in which the building is constructed the Controller shall take into account only that portion of the site on which the building is constructed and of a portion upto fifty per cent there of the vacant land if any appurtenant to such building the excess portion of the land, being treated as amenity;
Provided further that the cost of provision of amenities specified in Schedule I shall not exceed —
(i) in the case of any residential building, fifteen percent; and
(ii) in the case of any non-residential building, twenty five percent, of the cost of the site in which the building is constructed and the cost of construction of the building as determined under this Section.”
The learned Counsel for the petitioner contended that both the Rent Controller and the Appellate Authority held in construing the term, ‘building’ to include ‘the entire ‘building’. Whereas as per the definition of ‘building’ given in Section 2(2) of the Act,
“(2) “Building” means any building or hut or part of a building or hut, let or the be let separately for residential or non-residential purposes.”
So, upon the facts and circumstances of the case, part of the building alone ought to have been taken into consideration for calculating the market value. He also pointed out that it is an admitted case that the first floor was constructed in 1978 and the ground floor was constructed more than 25 years back. Therefore, the landlady was entitled to depreciation calculated for five years as per Schedule II.
5. On the other hand, Mr. Mohan the learned counsel for the respondent contended that there is no error with regard to the calculation of the market value both by the Rent Controller as well as the Appellate Authority, and the market value ought to be considered for the entire building irrespective of the age when the first floor was constructed.
6. There is force in the contention of the learned counsel for the petitioner that the definition of the ‘building’ given in Section 4(4) of the Act, should not be given a common parlance meaning but meaning given under Section 2(2) of the Act. In the T.N Buildings (Lease and Rent Control) Act, Section 2(2) defines “buildings” as follows:
“2.(2) ‘building’ means any building or hut or part of a building or hut, let or the be let separately for residential or non-residential purposes and includes —
(a) the garden, grounds and out-houses, if any, appurtenant to such buildings, hut or part of such building or hut and let or to be let along with such building or hut, but does not include a room in a hotel or boarding house;
(b) any furniture supplied by the landlord for use in such building or hut or part of a building, or hut, but does not include a room in a hotel or boarding house.”
The definition of building under Section 2(2) of the Act includes a part of a building and as such a part of building is building and therefore, when an application is filed for fixation of fair rent for a part of a building and if both the ground floor and the first floor are not constructed on the same date and there are different dates in construction of different portion of the building or a flat, then the cost of construction of that portion or a flat alone should be taken into account as per the definition of the building given in Section 2(2) of the Act. Therefore, there is an infirmity in the order of both the Rent Controller and the Appellate Authority with regard to the fixation of the age of the building and the calculation of the rate of depreciation as per Schedule II. It is also an admitted case that the ground floor was constructed more than 25 years back and the first floor was constructed in August 1978. The petitioner landlady herself has claimed a depreciation at the rate of 5%.
7. I am unable to accept the contention of Mr. Mohan, the learned counsel for the respondent to the effect that the entire building irrespective of the date of construction of the first or second floor should be taken into account as the same will go against the definition of the ‘building’ given in Section 2(2) of the Act. The learned counsel for the respondent refereed a decision Sivagananam v. Everest Boarding and Lodging (1969 (1) M.L.J 101 = (1968) 81 L.W 641) wherein Veeraswami, J. as he then was, has observed as follows:—
“Mr. Mathrubutham for the respondent argues that because the first, section and third floors are outside the purview of the Act, in the computation of fair rent it would not competent for the Rent Controller to take into account the first, second and third floors and that the entire market value of the site on which the ground floor stands should be taken into account in fixing the cost of the building. Apart from the fact that the arguments involves a gross injustice, I am inclined to think that the Court is not driven to accept that construction. It is a principle of interpretation in regard to jurisdiction of judicial and quasi-judicial forums that, if in order to give relief, which its competence it is necessary to touch upon and dead with a matter quite lawful to deal with such a matter as ancillary to the jurisdiction vested in the forum in respect of the relief within its jurisdiction. Further, the language “the market value of that portion of the site on which the residential building is constructed” has to be construed in a liberal way and building in that expression is the entire building, not merely that part of the building which is within the purview of the Act. If a part of a building is within the purview of the Act and the rest of it is outside it, and the Rent Controller is called upon to fix a fair rent for ground floor necessarily the entire building will have to be valued and for doing so, in my opinion, the Rent Controller will have jurisdiction. In order to fix the fair rent for the portion within the purview of the Act, he has necessarily to take the entire building which in in an ancillary matter.”
I am unable to accept the contention of the learned Counsel for the respondent as the ruling of the above case will not apply to the facts and circumstance of the present case. The above ruling deals with a case in which some portion of the building namely first, second and third floor were outside the purview of the Act and the entire market value of the site on which the ground floor stood, should be taken into account in fixing cost of the building. In the instant case, it is admitted that the ground floor was constructed 251 years back and the first floor was constructed in August, 1978. For assessing the market value of the building, as the building in the instant cast is the first floor, the cost of construction of the first floor alone has to be taken into consideration as per the definition “building” which includes part of a building.
8. The learned counsel for the petitioner filed C.M.P No. 1956 of 1994 for letting in fresh evidence, viz., the assessment order of I he property concerned issued to petitioner dated 19.11.1993 The learned counsel for the respondent filed a counter objecting to the receipt of additional evidence at this stage of Revision Petition. The learned counsel for the respondent contended that no additional evidence can be let in at the stage of revision. On the other hand, the counsel for the petitioner contended that Section 25 of the Act is wide and additional evidence can be let in even at Revision stage. I am unable to accept the contention of the learned Counsel for the petitioner that additional evidence can be let in at Revision stage. It is well settled that no additional evidence can be let in at the stage of revision. Even though the wording of Section 25 of Act is wider than Section 115 of the Civil Procedure Code, yet I am of the view that no additional evidence can be let in at Revision Stage. Therefore, C.M.P No. 1956 of 1994 is dismissed.
9. The learned counsel for the petitioner referred to a decision reported in Variety Emporium v. V.R.M Mohd. Ibrahim Naina. (1985 (I) M.L.J (S.C) 1) wherein, the Supreme Court has observed as follows:—
“(16.) No authority is needed for the proposition that, in appropriate cases, the Court must have regard to events as they present themselves at the time when it is hearing the proceeding, before it and mould the relief in the light of those events. We may, however, draw attention to a decision of this Court in Hasmat Rai v. Raghunath Prasad, (1981 3 S.C.C 103: ‘A.I.R 1981 S.C 1711: (1981) 3 S.C.R 605, the ratio of which may be stated thus: When an action is brought by a land lord for the eviction of a tenant on the ground of personal requirement, the landlord's need must not only be shown to exist at the date of the appellate decree, or the date when a higher Court deals with the matter. During the progress and passage of proceeding from Court to Court, if subsequent events occur with, if noticed would non-suit the landlord, the Court has to examine and evaluate those events and mould the decree accordingly. The tenant is entitled to show that the need or requirement of the landlord no more exists by pointing out such subsequent events, to the Court, including the appellate Court. In such a situation, it would be incorrect to say that as a decree or order for eviction is passed against the tenant, he cannot invite the Court to take into consideration subsequent events. The tenants can be precluded from so contending only when a decree or order for eviction has become final.” Justice R.S Pathak, who concurred with Justice D.A Desai and Justice Venkataramiah, expressed the same view thus: ‘It is well settled now that in a proceeding for the ejectment of a tenant on the ground of personal requirement under a statute controlling the eviction of tenants unless the statute prescribes to the contrary, the requirement must continue to exist on the date when the proceeding is finally disposed of either in appeal or revision, by the relevant authority. That position is indisputable.’”
There is no dispute regarding the law laid down by the Supreme Court in the abovesaid decision to the effect,
“No authority is needed for the proposition that, in appropriate cases, the Court must have regard to events as they present themselves at the time when it is hearing the proceeding before it and mould the relief in the light of those events.”
10. In the instant case, the question before the Rent Controller as well as the Appellate Authority was to fix a fair rent as per Section 4(4) of the Act. Section 4(4) of the Act reads as follows:
“4.(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 that while calculating the market value of the site in which the building is constructed the Controller shall take into account only that portion of the site on which the building constructed and of a portion upto fifty per cent thereof of the vacant land if any appurtenant to such building the excess portion of the land, being treated as amenity:
Provided further that the cost of provision of amenities specified in Schedule I shall not exceed —
(i) in the case of any residential building, fifteen percent; and
(ii) in the case of any non-residential building, twenty five percent, of the cost of site in which the building is constructed and the cost of construction of the building as determined under this Section”.
Section 4(4) specifically states that the fair rent should be fixed on the date of the application. Therefore, the fair rent on the date of application alone has to be taken into account and the market value has to be fixed for the purpose of calculation of the fair rent on the date of the filing of application and not with reference to any subsequent date. In this connection, the Supreme Court in the above ruling has observed that:
“ejectment of tenant on the ground of personal requirement under a statute controlling eviction of tenant, unless statute prescribes to the contrary, the requirement continue to exist on the date the proceeding is finally disposed of either in appeal or revision.”
In view of the above, there is no force in the contention of the learned counsel for the petitioner that market value value of the property given in subsequent assessment of Corporation of Madras dated 29.11.1993 should be taken into account for fixing fair rent.
11. In view of the infirmities in the order, passed both by the Rent Controller and the Appellate Authority referred to above, this Revision petition is allowed and the matter is remitted back to the Rent Controller to the limited extent of fixing the fair rent for the purpose of calculating depreciation as per Schedule II of the Act taking into account the age of the first floor as five years viz., the date of construction being in August, 1978. The Rent Controller has only to assess the quantum of rent as indicated above without letting any fresh evidence by either of the party.
12. Upon the facts and circumstance of the case, there shall be no order as to costs. C.M.P No. 1956/1992 is dismissed.
RR/VCS
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