1. C.R.P. 1690 of 1983 has been filed by the landlords challenging the orders of the Rent Control authorities fixing the fair rent of the premises at Rs. 998 from the date of the petition. C.R.P. 235 of 1983 has been filed by the tenant contending that the appellate authority should have confirmed the order of the Rent Controller fixing the rent at Rs. 815. This order disposes of both the revision petitions.
2. The petitioners purchased the premies No. 6 Sarojini St, Mahallingapuram, Madras 34, the ground floor of which is admittedly in the occupation of the respondent on a monthly rent of Rs. 425. The landlords had started proceedings for eviction of the tenant, but without prejudice to those proceedings, they filed a petition for fixation of fair rent expressly stating that they are not interested in enhancement of rent, but till they get an order of eviction, they will be entitled to higher rent.
3. The extent of the site on which the building is situate is 3000 sq.ft. and the built up area in the occupation of tenant is said to be 1600 sq.ft. There is also a vacant land, which was described as schedule a many to be used in common with the others to the extent of 1400 sq.ft. In addition, there is an overhead tank, electric motor and water pump. The value of the site was put at Rs. 96,000 per ground. On the basis of calculations made by the landlords, the fair rent, according to them, is Rs. 2980 per month. A schedule was attached to the petition which described the building as Class-I type-1. The age of the building was said to be 15 years. The built up area was stated to be 1600 sq.ft. The cost of construction calculated at Rs. 125 per sq.ft. came to Rs. 2,00,000. An additional amount of Rs. 40,000 was added on account of allowance for sanitation and electrification at the rate of 20 per cent. The probable cost of the site was calculated at Rs. 21,333. The building has three floors. An addition of 25 per cent was made on account of amenities making allowance for depreciation at 1 per cent for fifteen years. The cost was thus computed at Rs. 2,97,866.
4. The tenant disputed almost everything and according to him, the fair rent would work to Rs. 698 per month. He calculated the built up area as 1440 sq.ft. and calculated the value of the land at Rs. 12,000. So far as the tenant himself was concerned, he being in occupation of only one floor, the amount properly to be taken into account, according to him, was Rs. 4,000. The tenant calculated the cost of construction at Rs. 45 per sq.ft. and the age of the building as 25 years. Thus the cost of the building was taken at Rs. 59,470. He added 10 per cent on the cost of the site and cost of construction, so as to make the total cost at Rs. 69,817. On the footing that the building was 20 years old, 12 per cent gross returb, according to him, came to Rs. 8,370-04 annually and the monthly rent came to Rs. 698.
5. There is no dispute about the building being class I type-I. The Rent Controller proceeded to determine the cost of construction on the footing that the built up area was 1,400 sq.ft. at Rs. 52 per sq.ft. The cost thus came to Rs. 72,000. The Rent Controller then referred to something in the nature of cost of internal amenities which was calculated at Rs. 72-80. The age of the building was fixed as 18 years. Depreciation at the rate of one per cent on Rs. 50,000 which was the cost of construction was held permissible and the depreciated value of the construction was calculated at Rs. 66,867. The land value was taken as Rs. 50,000 per ground. Having regard to the fact that the tenant was in occupation of 1/3rd of the building, the cost of the ground allowable to the portion in his occupation was worked out at Rs. 14,593. Arriving at the total cost of the land the depreciated value at Rs. 81,450, the fair rent was worked out at Rs. 815 per month.
6. The landlord challenged the order by way of an appeal. The Appellate Authority, however, proceeded on the footing that the Rent Controller had not taken into account the garage, bath room and the porticoes which totally accounted for 470 sp.ft. He separately calculated their cost at Rs. 40 per sq.ft. Then the total cost of the building was computed at Rs. 91,600. He allowed ten percent on account of amenities in the nature of a compound wall, an overhead tank, electricity etc. The cost of constitution thus came to Rs. 1,00,760. He took the age of the building as 18 years and after deducting the amount of depreciation at Rs. 10,137 he arrived at the deprecited value of Rs. 82,623 Proceeding on the footing that the cost of the land was Rs, 50,000 per ground, the cost allowable to the portion occupied by the tenant was determined at Rs. 12,986. On account of open land, the Appellate Authority found that after deducting 1870 sq.ft. of built up area from the total plot area of 3,000 sq.ft. the rest must be treated as vacant space and since this was more than 50 per cent of the total built up area, only 50 per cent of the open space could be considered for arriving at the land value which was calculated on apportionment at Rs. 4,267. The total figure thus came to Rs. 99,876 and the computation of fair rent was made at Rs. 998 being 1/12th of the 12 per cent of this amount. This finding of the Appellate Authority is now challenged by the landlords and the tenant.
7. The learned counsel appearing on behalf of the petitioners—landlords has at the threshold made a grievance that though S. 4(5)(a) of the Tamil Nadu Buildings (Lease and Rent Control) Act 1960 specifically referred to the rates adopted for the purpose of estimation of the cost of constructions by the Public works Department of the Government for the particular area in which the premises were situate, the Appellate Authority declined to make these rates available to the landlords on the ground that they are confidential in character. The landlords had made an application to the Appellate Authority being M.P. 1007 of 1982 to send for the necessary records relating to the rates determined by the Public Works Department. This application came to be rejected by the Appellate Authority on 23-9-1982. Apart from holding that it was not mandatory that P.W.2 rate alone was to be taken into consideration by
"The rates as given by the P.W D. authorities are confidential in nature and the petitioners, therefore, are not entitled to summon the P.W.D. for producing the tables before the Appellate Authority."
It is obvious that the Appellate Authority was clearly in error in holding the rates specifically referred to in S. 4(5)(a) of the Act were confidential. If the rates fixed by the Public Works Department were required to be taken into account by the Rent Controller, statutorily then surely the parties are entitled to know what those rates are. The cost of construction is essentially a matter of Judicial determination by the Rent Controller. No circumstances which is confidential in character can enter in the judicial determination of a fact which has an imperative relevance in the determination of fair rent.
8. S. 4 of the Rent Control Act prescribes the mode of determination of fair rent sub-S.(2) of S. 4 deals with fair rent for any residential building which has to be determined at nine percent gross return per annum on the total cost of the building. Sub-S.(3) of S. 4 refers to fair rent for any non-residential building and it is 12 percent gross return per annum on the total cost of the building, sub-Ss.(2) and (3) use the phraseology ‘total cost of such building’. How this total cost for the purpose of sub-Ss. (2) and (3) is to be computed is laid down in sub-S.(4) which runs as follows:—
"The total cost referred to in sub-S-(2) and sub-S.(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 is constructed and of a portion upto 50 per cent, thereof of the vacant land, if any appurtenant to such building the excess portion of the vacant 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 per cent, of the cost of site in which the building is constructed, and the cost of construction of the building as determined under this section."
Then comes sub-S.(5)(a) of S. 4, which prescribes the manner of determining the cost of construction. S. 4, therefore, contains two different concepts. One concept is the total cost of construction of the building. The total cost of the building is a composite figure consisting of (1) the market value of the site in which the building is constructed; (2) the cost of construction of the building and (3) 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. So far as the first item, namely, the market value of the site is concerned, the first proviso to S. 4 (4) requires that while calculating the market value of the site in which the building is constructed, only that portion of the site at which the building is constructed and 50 per cent thereof of the vacant land appurtenant to such building only is to be taken into account. Any excess of the portion of the vacant land is to be treated as an amenity. The second proviso refers to cost of provision of amenities which in the case of residential building is not to exceed 15 per cent and in the case of non-residential building 25 percent of the cost of the site in which the building is constructed and the cost of the construction of the building as determined under S. 4.
9. Now so far as the second item, namely the cost of construction is concerned, sub-S.(5) mandates that the cost of construction must include the cost of internal water supply, sanitary and electrical installations. These have to 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. It is obvious that when sub-S.(5) (a) refers to the cost being determined with due regard to the rates, it contemplates that the rate fixed by the Public Works department as the cost of construction is a relevant factor. The proviso, however, limits the power of the Rent Controller to fix the cost of construction. The proviso is an attempt to restrict the cost of construction for the purpose of fixation of fair rent to the outer limit of 30 per cent over the estimate made by the Public Works department. A discretion is, given to the Rent Controller to allow or disallow an amount not exceeding 30 per cent of the construction having regard to the nature of the construction of the building. Therefore, when either the landlord or the tenant applies for fixation of fair rent, he will be entitled to know as to what are the rates which are fixed by the Public Works department. Unless these rates are intimated to the parties or at least they are put in the know of these rates, it would be illegal and improper for the Rent Controller to take these rates into consideration for the fixation of fair rent. The appellate authority was, therefore, not right in taking the view that the rates are confidential in character.
10. Some grievance has been made before me that the rates which are made available by the Public Works department authorities to the Rent Controller are different from those which are prescribed by the Public Works department itself in the Mini Technical Hand book of 1985 which has been made available to me. The grievance is that in 1981, according to this publication which prescribed the rates on buildings in Tamil Nadu, in respect of land bearing structures in Madras City the rate is Rs. 790 per sq., meter which would approximately come to Rs. 79 per sq.ft., but the rates intimated to the Rent Controller were lesser.
11. There is no material except the order of the Rent Controller, to show what rates were intimated to the Rent Controller, but the order of the Rent Controller does lend support to the argument that the Rent Controller must have been intimated the figure of Rs. 52 because that is the rate which is taken into account for determining the cost of construction. The application in the instant case was made some time in April, 1981 and the learned counsel appearing for the landlords would, therefore be justified to contending that if the plinth area rate of the building is published by the Public Works Department at Rs. 790 per sq., meter, then the rate supplied to the Rent Controller cannot be different from the rate which the Public Works department itself had prescribed. In other words, for the purpose of calculation of the cost of construction, there cannot be a rate different from the rate which is normally fixed by the Public Works department and which finds a place in what is described as Mini Technical Handbook issued by the Association of Engineers and Assistant Engineers Association of the Tamil Nadu Public Works department.
12. There is, therefore, apparent error in the orders of the Rent Control authorities when they have taken a rate which is different from the one which is prescribed by the P.W.D., authorities themselves. There are other errors in the orders which makes it difficult to dispose of the revision petitions finally and determine the figure of fair rent. There is a dispute with regard to the area and age of the building.
13. One thing which I have repeatedly noticed in the Rent Control applications made for fixation of fair rent is that the land lord who must normally be in possession of the sanctioned Corporation map, if he has constructed the building, does not pro duce the plan or the map. If he has purchased the property, then one expects the landlord to produce the sale deed which will give the necessary details with regard to the price for which the property has been purchased and the dimensions of the plot on which the house has been constructed. Normally, the vendor would pass on to the purchaser the sanctioned plan also. Many times the sanctioned plan or some plan forms an annexutre to the sale deed. It is noticed that the landlord does not produce the material documents which are in his possession. He withholds the material particulars which are within his special knowledge which can help the Rent Control authorities to arrive at the correct conclusion with regard to the age of the building and the area of the building and the plot and these matters are left to be determine on vague oral evidence. Often, though the Engineers are examined by the parties, the plans and measurements and the notes made by them are not produced on record. If these material documents are not produced by the landlord on the tenant the Rent Controller would be entitled to draw an adverse inference unless an acceptable explanation is given for non-production of the documents or unless proper acceptable evidence is adduced with regard to matters which would have been proved by the production of the original documents.
14. In the instant case, there is a dispute about the area of the building itself. The tenant's engineer had put the area of the building as 1380 sq.ft. The landlords in their petition have put the built up area as 1600 sq.ft. the best thing for the landlords would have been to put on second the sanctioned plan from the Municipality or the Corporation which would, in a sense, be conclusive evidence of the area of the building. Then the landlord in their petition referred to some schedule amenities which are in the form of an overhead tank, mosaic flooring, and electric motor pump. Neither the appellate authority nor the Rent Controller has applied his mind to in respect of these amenities. The existence and the extent of some of them have to be proved by the landlords, sub-S.(4) of S. 4 requires ‘the cost of provision of anyone or more of the amenities specified in schedule I as on the date of application for fixation of rent’ to be included in the total cost. The Appellate Authority has permitted an ad hoc addition of ten per cent in respect of ‘compound wall, overhead tank electricity etc’. This is hardly a proper way of determination of total cost when the statute requires the cost of each amenity specified in schedule. I to be separately determined. If the landlord fails to give positive evidence of the cost of providing the amenities, the Rent Controller would be justified in ignoring the cost of such amenities. The Appellate Authority has also failed to see that the facility of having electrical fit tings and installations by itself cannot be treated as an amenity in schedule I, The cost of construction includes the cost of obtaining water supply, sanitary and electrical installations. Therefore, which electrical installations fall under S. 4(5) (a) and which electrical installation is in the nature of amenity in schedule I is a matter of evidence, to be separately proved and separately determined by the Rent Controller. The whole litigation with regard to fixation of fair rent has thus been dealt with by the authorities in a most casual fashion. The Rent Control authorities have proceeded to determine fair rent without any reference to what is required to be done under the provisions of S. 4 In this state of affairs, it is not possible to uphold the findings of any one of the two authorities. It is, therefore, not necessary to go into the challenge made to the computation of the value of the items which are material for the determination of fair rent. The whole case needs reconsideration in the light of what is said in the judgment. This matter must go back to the Rent Controller for a proper decision in regard to the different amount in the nature of cost of construction cost of land and the cost of amenities in schedule-1.
15. In so far as the cost of land is concerned, again it is true that both the courts have accepted the value of Rs. 50,000, but it has not been possible to find out on what evidence this has been determined. It is however not necessary to go into the correctness of this figure because that figure is not challenged by either of the parties.
16. I, therefore, set aside both the orders of the Rent Control authorities. The matter is remitted back to the Rent Controller for fresh determination according to law after recording fresh evidence. The Rent Controller will call upon the landlords to file the plan of the house, the sale deed and evidence with regard to the age of the building which will be proved by the sanctioned plan which can easily be obtained from the Corporation. The Rent Controller will also make available to the parties the rates which have been fixed by the Public Works department before he proceeds to decide the question of fair rent. It is expressly made clear that the question of valuation of the site at Rs. 50,000 per ground is not open to any fresh agitation.
17. The revision petitions are disposed of accordingly No costs.