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Chapsi-Umersi v. Keshavji Damji
Judicial Opinion Summary — Setalvad, J.
Factual and Procedural Background
This suit concerns a ground-floor godown at Mandvi owned by Keshavji Damji. On 28 September 1916 Keshavji entered into an agreement leasing the godown to the plaintiffs for twenty-three months commencing 25 December 1916. Completion of reconstruction was delayed; the godown became ready in February 1917 and the plaintiffs began paying rent from 22 February 1917.
The plaintiffs sub-let the godown to the defendants at Rs. 275 per month as from 22 February 1917; the defendants entered into possession and paid rent at that rate until 12 March 1918. From 13 March 1918 the defendants refused to pay Rs. 275 and contended that the statutory standard rent was Rs. 110 under the Rent Act; they paid Rs. 1,474 at Rs. 110 up to 27 July 1919, which the plaintiffs accepted under protest.
The plaintiffs sued for Rs. 5,101 (rent at Rs. 275 per month from 13 March 1918 to 20 March 1920, less the Rs. 1,474 credit), and further sought declaration that Rs. 305 per month is the standard rent, having given notice on 14 February 1920 that they would demand Rs. 305 from March 1920. The central contested question identified by the court was: "What is the standard rent the defendants are liable to pay?"
Procedurally, the owner Keshavji Damji earlier sued the plaintiffs in the Small Cause Court for rent at Rs. 305 per month for the period 13 March 1918 to 8 July 1918; that court held Rs. 305 was the standard rent and the Full Bench confirmed the decree. Keshavji also sued in the High Court (Suit No. 2974 of 1919) for subsequent rent; the present plaintiffs submitted to a decree in that suit. In this suit the defendants initially alleged collusion in those earlier proceedings but abandoned those charges during trial.
Important factual background relevant to the statutory question: Narandas Mathuradas had occupied a different godown (or the earlier premises) and was paying Rs. 100 as rent (rent bill dated 17 January 1916). Keshavji acquired the building in mid-1915, found it dilapidated, and carried out substantial reconstruction (architect Karani's evidence, accepted by the court). The owner spent substantial sums on reconstruction, added 36 square yards of adjacent land, and completed the ground floor in February 1917 and the whole building by early 1918. The architect's evidence and the court's findings were that the result amounted, for all practical purposes, to a new building; the godown in dispute was part of that reconstructed/new building.
Legal Issues Presented
- What is the standard rent the defendants are liable to pay for the godown?
- Whether, for the purpose of the Bombay Rent (War Restrictions) Act, the rent first charged by an immediate landlord (i.e., a tenant who sublets) to a sub-tenant can constitute a separate "standard rent" for that sub-tenant (i.e., whether different standard rents can exist for the same premises as between different persons).
Arguments of the Parties
Plaintiffs' Arguments
- The premises in suit are, in substance, new premises after reconstruction; therefore the statutory standard rent must be taken as the rent at which the premises were first let after 1 January 1916.
- The first letting after 1 January 1916 was by Keshavji Damji to the plaintiffs at Rs. 305 per month; consequently Rs. 305 is the statutory standard rent and the defendants are liable to pay that sum.
Defendants' Arguments
- The defendants contended the standard rent was Rs. 110 under the Rent Act and accordingly paid at that rate (Rs. 1,474 in total up to 27 July 1919).
- Alternatively, it was contended that, as between the plaintiffs (who were tenants) and the defendants (sub-tenants), the letting by the plaintiffs to the defendants at Rs. 275 per month should be treated as the first letting after 1 January 1916 for purposes of determining the standard rent between those parties (relying on the statutory definitions which include tenants within "landlord" and sub-tenants within "tenant").
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| King v. York | That the statutory control operated "in rem" on houses — the Act applied to houses, not to persons; it stereotyped the rent of a house (Increase of Rent & Mortgage Interest Act, 1915 context). | The court relied on this authority to support the view that the Rent Act fixes a single standard rent in relation to premises (the house/godown) rather than permitting different standard rents between different persons dealing with the same premises. |
Court's Reasoning and Analysis
The court's analysis proceeded in two principal strands: (A) factual determination whether the godown was the same premises let on 1 January 1916 or in substance a new premises after reconstruction, and (B) legal interpretation of the Rent Act provisions concerning "standard rent" and the effect of the statutory definitions including tenants and sub-tenants.
A. Factual determination: The court accepted the evidence of the architect Karani that the works carried out after Keshavji's purchase effectively produced a new building. The court relied on the following findings of fact in reaching that conclusion:
- The owner bought the building in 1915; it was dilapidated and largely unoccupied.
- Major reconstruction began in March/April 1916; the ground floor finished in February 1917; complete by early 1918.
- Substantial expenditure was incurred and structural works effected: the building was practically re-walled, re-floored and re-roofed; most old beams and joists were removed and replaced; a new chowk was created; free ventilation and new access were provided; 36 square yards of adjoining land were added and used to improve access.
- Specific to the godown in suit: west and north walls were new, a large proportion of posts, beams and joists were new, and the floor was re-laid; overall the godown had materially different physical characteristics (more light and air, new access) than the older premises.
On this factual basis the court concluded the godown in suit was part of the reconstructed (practically new) building and therefore was not the same premises that had been let to Narandas on 1 January 1916. Accordingly, the rent paid by Narandas on that date could not serve as the statutory standard rent for the godown in suit.
B. Legal interpretation: The court examined the relevant definitions and provisions of the Bombay Rent (War Restrictions) Act (noting Section 2(a)(i) and Section 2(a)(ii) as cited in the opinion) and the definitions of "landlord" and "tenant" which include tenant/sub-tenant relationships. The defendants' contention that different standard rents might apply as between different persons (original landlord to tenant, and tenant to sub-tenant) was rejected for the following reasons set out by the court:
- The statutory definitions extending "landlord" to a tenant and "tenant" to a sub-tenant were, in the court's view, intended to extend the benefits of the Rent Act to sub-tenants, not to permit multiple different "standard rents" for the same premises depending on the parties involved.
- The express text of S.2(a)(i) and S.2(a)(ii) refers to the rent at which premises were "let (not sub-let)" on 1 January 1916 or first let after that date. The parenthetical "(not sub-let)" was treated as significant, indicating that "let" by the owner (not a subletting) is the relevant transaction for fixing standard rent.
- The court observed that "standard" implies a single rule or model; standard rent must be fixed in relation to the premises and not vary by persons dealing with it.
- Policy considerations: allowing different standard rents between different persons would permit a tenant to obtain the benefit of the Rent Act as against the owner while exploiting a sub-tenant by charging a higher or different rate — an outcome inconsistent with the statute's protective object (to prevent tenants being made to pay rents regarded by the Legislature as excessive or unreasonable).
- The court cited King v. York for the Proposition that the relevant statute operates in rem — it "stereotypes the rent of a house" — and applied that reasoning to conclude the Rent Act fixes the standard rent for premises generally, not differently between persons.
Combining the factual finding that the godown was effectively new with the legal conclusion that standard rent is a single, premises-based concept, the court concluded that the standard rent is the rent at which the reconstructed premises were first let after 1 January 1916 — namely Rs. 305 per month, being the rent charged by Keshavji Damji to the plaintiffs.
Holding and Implications
Holding: The court decreed the plaintiffs' suit. The court's essential ruling is that the standard rent for the premises is Rs. 305 per month, and the defendants are liable to pay rent at that rate. The court ordered a decree for the plaintiffs as prayed, with costs and interest on the judgment at 6 percent.
Implications: The direct effect is that the defendants must pay rent at Rs. 305 per month and the plaintiffs obtain a decree for the sums claimed (with costs and 6% interest). The court's reasoning treats "standard rent" as a single figure determined in rem with reference to the premises (the first letting after 1 January 1916 for premises first let after that date), and it rejects the proposition that separate standard rents can exist for the same premises as between different parties. The opinion does not elaborate on broader doctrinal or administrative consequences beyond the case-specific outcome.
Disposition: Suit decreed.
Setalvad, J.:— This suit relates to a godown situated on the ground floor of a house at Mandvi belonging to one Kashavji Damji. On the 28th of September 1916, an agreement was entered into between Keshavji Damji and the plaintiffs for a lease of this godown for twenty three months, to commence Cram 25th December 1916. At this time the building was being reconstructed and the ground floor was expected to be ready in December and so the lease was made to commence from 25th December. The godown, however, became ready in February 1917, and the plaintiffs commenced paying rent from 22nd February, 1917. The plaintiffs sub-let the godown to the defendants for Ba. 275 per month as from the 22nd of February 1917 and the defendants entered into possession on that dale. The plaintiffs never themselves entered into possession except through their sub-tenant, the defendants. The defendants commenced paying rent to the plaintiffs from the 22nd February 1917. The defendants paid the said rent of Rs. 275 up to 12th Marsh 1918, but thereafter they refused to pay the stipulated rent and contended that Rs. 110 was the standard rent which, under the Rent Act, they were liable to pay. The defendants paid Rs. 1,474 as rent at the rata of Rs. 110 up to the 27th July 1919 which, the plaintiffs took under protest. The plaintiffs claim in this suit Rs. 5,101 being the rent at the rate of Rs. 275 par month from 13th March 1918 to 20th March 1920 after giving credit for Rs. 1,474 paid as aforesaid by the defendants, and claim further rent at Rs. 305 per month, contending that is the standard rent of the premises. By their latter of 14th February 1920, the plaintiffs had given, notice to the defendants that they should him, from March 1920, Rs. 305 from the defendants as the standard rent. The only ??? in the case is, “What is the standard rent the defendants are liable to pay?”
2. It appears that Keshavji Damji, the owner of the premises, filed a suit against the present plaintiffs, in the Small Cause Court, to recover rent at the rata of Rs. 305 per month, for four months, from 13th March 1918 to 8th July 1918. The precent plaintiffs contended in the said suit that Rs. 305 was not the standard rent, but he Small Cause Court held against the ??? plaintiffs that Rs. 305 par month was the standard rant and awarded the came. The said decree was confirmed ??? the Full Bench of the said Court.
3. The said Keshvji Damji instituted another suit against the present plaintiffs in the High Court, being suit No. 2974 of 1919, to recover rent for thirteen months, subsequent to the 8th of July 1918 at the rats of Rs. 305 per month. The present plaintiffs had in that suit to submit 60 a decree for rent at that rate. In the present suit the defendants in their written statement alleged that the proceedings in the Small Cause Court and the High Court were collusive and that in any event they ware not bound by the results of those suits. These charges of collusion were, in the course of the trial, abandoned.
4. One Narandas Mathuradas was, in January 1913, in occupation of the space comprised within the godown in suit as a tenant, and he was then paying Rs. 100 as rent as shown by the rent bill, dated 17th January 1916, produced by him (Ex. 4), but it is contended that the godown in suit is not the premises that were in the occupation of the said Narandas on the 1st of January 1916, but to all intents and purposes, it is new premises, and, therefore, the statutory standard rent must be taken to be the rent at which it was first let. The godown in suit is on the south, and there is another godown on the north which is now occupied by the said Narandas. It appears that Keshavji purchased the building on the ground floor of which the godown in suit is situated, in July 1915, in partnership with one Bhimji. Bhimji's interest was bought by Keshavji who, thereupon, became full owner in September 1915. When Keshavji bought the building. It was in a very dilapidated condition, and there ware no tenants on the four upper floors and, except the good owns on the ground floor, the building was unoccupied. Keshavji paid for this building Rs. 73,000. He was advised by his architect, Karani, to reconstruct the building, and no appears to have expended on such reconstruction Rs. 95,000. The rateable value of the old building, when Keshavji bought it, was Rs. 3,785, and the rateable value, now assessed by the Municipality, of the reconstructed building, is Rs. 18,381. The original building stood on 544 square yards of land, and in the reconstructed building further 36 square yards of adjoining land, which was vacant and which belonged to Keshavji, were added. Three different applications ware submitted to the Municipality at different times for reconstructing different portions of the building. These applications were submitted, under Section 342 of the City of Bombay Municipal Act, apparently in order to avoid the set-back and other requisitions which would have been made by the Municipality if the application had been in form for the construction of a new building under Section 337 of the City of Bombay Municipality Act. The work was begun in March or April 1916, the work on the ground floor was finished in February, 1917, and the work on the whole of the building was finished in the beginning of 1918. The evidence of Karani, the architect, which I accept, makes it clear that the net result of the operations that he carried not has been to put up, for all practical purposes, a new building in place of the old building, and, if so the portion let to the defendants, namely, the godown in salt, is a part of the new building. The whole building was practically re-walled, re-floored, and re-roofed, and a new Chowk to bring in more light and air was made. Free ventilation has been provided, and access to the D'Souza Street has been given. Most of the old beams and joists were removed and new ones put in, and one can fairly say that there was now a new building. Taking the godown itself, the west and north walls are new. A large proportion of the posts, beams and joists in the godown are new, and the ??? is also practically new. The floor of the godown has been re-laid. The present godown has more light and air than the old one, and has now access into the D'Soaza Street oyer the ??? constructed on the 36 square yards of the land added to the building. If, then, the premises in suit were not the premises that were let to Narandas on 1st of January 1916, the rent then paid by him cannot be regarded as the standard rent for the godown in suit. The standard rent is the rent at which these new premises ware first let after the 1st of January 1916. They were so let by Keshavji Damji to the present plaintiffs at the rent of Rs. 305 per month. But it is contended that, assuming ghat these are new premises and they were not let on the 1st of January 1916, the letting by the plaintiffs to the defendants at Rs. 275 per month should be taken, as between them, as the rent at which the premises were first let, after the 1st of January 1916, within the meaning of Section 2(a)(ii) of the Bombay Rent (War Restrictions) Act. This involves the contention that there can be different standard rents for the same premises as between different individuals, and that while the standard rent between Keshavji and the plaintiffs for these premises may be Rs. 305 per month, the standard rent as between the plaintiffs and the defendants is Rs. 275. This contention is based on the definition of the expressions ‘landlord’ and ‘tenant’ in the Rent Act. ‘Landord’, according to the definition, includes a tenant who sublets any premises, and the expression ‘tenant’ includes a sub-tenant. The argument is that, as between a tenant who is a landlord according to this definition and his sub-tenant who is regarded as tenant for this purpose, the letting to be looked to is the letting by the tenant to the sub-tenant. The only object to my mind of including in the definition of ‘landlord’ a tenant, and in the definition of ‘tenant’ a sub-tenant, is to extend the benefits of the Rent Act to subtenants, but I do not think that it was intended that the standard rent was to be determined by different standards between the original landlord and the tenant and between the tenant and the sub-tenant. Otherwise, the tenant, while himself getting the advantage of the Rent Act, would be able to profiteer as between himself and the sub-tenant. Supposing a tenant took certain premises in 1917 for a monthly rent of Rs. 200 and then sub-let them for Rs. 300 to another person, after the coming into operation of the Rent Act, he would be entitled to claim that he was liable to pay only the rent at which the premises were let on the 1st of January 1916 which, let us suppose, was Rs. 100 a month, while the sub-tenant would be obliged to pay to him Rs. 300 that being the rent at which the premises were first let after the 1st of January 1916 as between them. In S. 2(a)(i) standard rent in relation to any premises is defined as the rent at which the premises were let (not sub-let) on the 1st of January 1916. With reference to premises that were or shall be first lei after the 1st of January 1916, standard rent is the rent at which they were or shall be first let (not sub-let). ‘Standard’ means to rule or a model and can only be one. The whole object of the Rent Act is to prevent tenants being made to pay rent which the Legislature considers excessive or unreason able. In regard to the same premises rent which the law regards as unreasonable or excessive between the original landlord and tenant ought not to be regarded at reasonable between the tenant and the sub-tenant. Similarly, rent which the law regards as reasonable between the original landlord and tenant ought not to be regarded as unreasonable between the tenant and the sub-tenant. Standard rent must I think, mean the rent at which the premises were originally let. The standard rent is to be fixed in relation to premises and not in relation to persons, and can therefore, be only one and not I varying as between different individuals. In the case of King v. York (1) the Court of Appeal in dealing with the provisions of the Increase of Rent & Mortgage Interest Act, 1915, said:— “The Act applied to houses, not to persons. The Act operated in rem, not in personam. It stereotyped the rent of a house”. The present case is no doubt somewhat peculiar, because the original tenants (the plaintiffs) took the premises at a rent of Rs. 305 per month and sublet them to the defendants at a reduced rent of Rs. 275. Such cases will always be rare: ordinarily there will be cases of sub-tenants taking premises at an enhanced rent or the same rent as the tenant is paying. If the standard rent in relation to these premises is Rs. 305, being the rent at which they were first let after 1st of January 1916, then the defendants are liable to pay that rent. There will be a decree for the plaintiffs as prayed with costs and interest on judgment at 6 per cent.
5. Suit decreed.
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