These revision petitions arise out of proceedings under the Madras Buildings (Lease and Rent Control) Act of 1949, as amended by Acts VIII of 1951 and XXVI of 1955. The petitioner in these petitions is the landlord of premises Nos. 1 to 4, Devaraja Mudali Sr., also known as Nos. 27 to 32, Evening Bazar, P.T, Madras. The respondents are tenants of the said premises. They filed a petition before the Rent Controller for fixation of fair rent in respect of the abovesaid premises. The Rent Controller fixed the fair rent at Rs. 262-8-0. But on appeals filed by both the landlord and tenant, the Second Judge, Small Cause Court, Madras, dismissed the landlord's appeal and allowed the tenants' appeal and modified the order of the Rent Controller by fixing the fair rent for the premises at Rs. 150. It is against this order that the landlord has filed the above revision petitions.

It is necessary to give some facts before deciding the questions raised in these petitions. The suit buildings were originally owned by one Colla Ramaratnamma. Messrs. Hajee Abu Bucker and Sons, the original lessees entered into a lease agreement with the said Colla Ramaratnamma under a registered lease deed in 1917 for a period of 25 years with an option for renewal of the lease for a further period. They built up the superstructure that is now standing on the site at their own cost. In 1938 the lease was renewed for a further period of 15 years by the tenants by another registered lease deed. The original rent for the entire premises was Rs. 115 per month. Subsequently as the result of application for enhancement of rent, the Rent Controller fixed the fair rent of Rs. 150 per month. In or about 1954, the petitioner Ethirajulu Naidu purchased the suit premises and the tenants attorned to him and they were paying the rents to him at the rate of Rs. 150 per month. The landlord was also issuing receipts acknowledging receipt of the rents. Subsequently misunderstandings arose between the parties with the result that there were several proceedings before the House Rent Controller. In or about May, 1957, during the pendency of the proceedings, the tenants entered into a lease deed with the petitioner-landlord for a period of ten years agreeing to pay a rent of Rs. 450. The application for fair rent out of which these petitions arise was filed in the name of the respondent firm by R. M. Jamal, who along with his brother have purchased the business of the firm, complaining that the rent stipulated under the lease deed was excessive and that the fair rent for the premises should be fixed at Rs. 150 per month.

The application was resisted by the landlord on the ground that it is not maintainable and that R. M. Jamal who has filed the application on behalf of Hajee Abu Bucker and Sons is not a patner of that firm. The other allegations in the counter filed by the landlord are the following. The original lessees Hajee Abu Backer and Sons allowed one R. M. Jamal to be his sub-tenant and to run a separate shop called “Jamals Corner shop” in a portion of the said premises without the consent of the previous landlord. The said R. M. Jamal was only permitted to pay rent on behalf of Hajee Abu Bucker and Sons. There is therefore no relationship of landlord and tenants between the parties to the application. There is no privity of contract between the present tenants and the landlord.

The question that came up for decison before the lower Courts was whether there was any relationship of landlord and tenant between the parties and whether the application of the respondents was maintainable. Both the Courts came to the conclusion that the application was maintainable. Evidence has been adduced to prove that the original tenant Hajee Abu Bucker and Sons transferred their business as a running concern including their goodwill to their sub-tenants “Jamals Corner Shop”. Ex P.4 dated 17th April 1958 is the letter written by Hajee Abu Bucker and Sons informing the present landlord Ethirajulu Naidu that they had decided to sell their business as a running concern including the goodwill lease-hold rights and quota rights etc., to R. M. Jamal and I. M. Jamal partners of Jamais Corner Shop, and that the latter would be paying rent on and from 1st May, 1958. Since no reply was received from the landlord, the firm wrote another letter Ex. P.6 a few days before the actual transfer informing the landlord that M. S. Mohamed and Ahmed S. Mohamed, the partners of Hajee Abu Bucker and Sons, had agreed to assign and transfer the business including the goodwill and leasehold rights to the said I.M Jamal and R. M. Jamal, who would constitute the firm of Hajee Abu Buker and Sons from 1st May 1958. The landlord never cared to reply to these letters. On the other hand, after the transfer of the business, he was receiving rents sent by cheques by the Jamal Brothers for Hajee Abu Bucker and Sons and was issuing receipts therefor. There is overwhelming documentary evidence to prove that he recognised Jamal Brothers as his tenants. He also agreed to take from them Rs. 450 per month as rent. It is idle for him to either deny or dispute their rights in respect of the premises. The preamble to the original lease deed executed by N. S. Mohamed and Ahmed S. Mohamed as partners of Hajee Abu Bucker and Sons specifically says that the term “lessees” shall include their heirs, executors, administrators, and legal representatives successors-in-interest and assigns. R. M. Jamal and I. M. Jamal having purchased the firm and having become the new partners of Hajee Abu Bucker and Sons, the interests in the firm have devolved on them. It is also clear from Exs. P.4 and P.6 that the landlord was duly informed by the original partners of the transfer of their leasehold rights to I. M. Jamal and R. M. Jamal, who were to constitute the firm of Hajee Abu Bucker and Sons from 1st May, 1958. As stated above, the landlord never replied to these letters or disputed the rights of I. M. Jamal and R. M. Jamal to continue as tenants of the shops in question. It is not therefore open to the landlord to contend that they are not his tenants.

It is settled law that on a valid assignment the assignee becomes a tenant of the lessor by privity of estate. The relationship of landlord and tenant postulates in ordinary parlance the existence of a contract. On assignment when the assignee becomes the tenant, the term “tenant” is used in that context in a special sense and has relation to the liability of the assignee to such of the covenants in the contract of original tenancy which run with the land. In the words of Lord Ellenborough, the relationship between an assignee and the lessor is based on “a real contract” in respect of land, which is local in its nature [Stevenson v. Lambard(1)]. The ‘real contract’ relates to covenants running with the land and which are contained in the lease. Similarly in Guna v. Parashram(2) it was observed that when the lessor recognises the assignee as his tenant by accepting rent from him, that does not amount to a new lease to the assignee, but merely an admission that he has legitimately become the assignee of the original lessees' interest. In Thathalan v. Eralpad Raja Calicut(3), Wallis, C. J., observed that the acceptance of rent by the lessor from the assignee, creates a privity of contract between the lessor and the assignee. I think these authorities are enough for negativing the contention of the landlord that the respondents are not his tenants and that they cannot maintain the application for fixation of fair rent.

The next question that I have to consider is whether the appellate authority is right in reducing the fair rent fixed by the Rent Controller. The Rent Controller before fixing the fair rent made an inspection of the premises in question. He points out in his order that the building is situated in a very important business locality and the shops are at the junction of Devaraja Mudali St., and Evening Bazar. While fixing the fair rent for the shops in question, he has taken into consideration the Corporation extract giving the annual valuation for 1939-1940 at Rs. 2170 and the half yearly tax at Rs. 280-10-8, and also the evidence regarding the rents fetched by shops in the locality given by three witnesses, who are carrying on business in adjacent shops. But the appellant authority without taking into account all these factors reduced the fair rent mainly on the ground that in the previous proceedings for fixation of fair rent, the rent was increased from Rs. 115 to Rs. 150 and there are no special circumstances warranting a further increase in rent and that it is not necessary to embark upon a fresh enquiry as to what the fair rent for this building is. I am unable to agree with the reasons given by the appellate authority for reducing the fair rent to the amount fixed in the previous proceedings. Any finding given in the previous proceedings with regard to fair rent for the premises would not be pre-resjudicata because fixation of fair rent depends upon various factors and special circumstances and fair rent cannot remain the same for all time. The position is likely to change from time to time and factors such as the importance of the locality, the prevailing rents for shops in the locality etc., have all to be taken into account. R. 8 of the present Madras Buildings (Lease and Rent Control) Rules, Schedule I also lays down elaborate procedure to be followed for determining the fair rent both for residential and non-residential buildings. In my opinion, the appellate authority was not justified in interfering with the finding of the Rent Controller especially when the Rent Controller has fixed the fair rent after personal inspection of the suit premises and after taking into account all the relevant materials placed before him. Further under the present Act, rules have been provided for fixation of a reasonable rent by authorised officers both to the residential building and non-residential building. The petitioner himself filed an application for fixing fair rent as per the rules provided under the present Act. Therefore I remand these petitions only for the specific purpose of fixing a fair and reasonable rent in respect of the suit premises as per the provisions of R. 11 of the Madras Buildings (Lease and Rent Control) Act of 1961 in respect of the non-residential buildings.

The petitions are accordingly allowed. In the circumstances the parties will bear their own costs throughout.

C. M. P. No. 6986 of 1963—No orders are necessary in this petition.

V.C.S