This Court in George v.T.K.Saidu
Muhammed [2013 (2) KHC 326] held that fixation of fair
rent is to be ordered by the Rent Control Court from
the date of application or petition. We are of the
view that rights and liabilities to the parties to the
lis have to be determined with reference to the date of
filing of the petition. However, in the matter
relating to the fair rent fixation there can be a
departure from such rule on finding that reliance
placed by the Landlord to fix the fair rent is based on
a material that has arisen subsequent to the filing of
petition. The fair rent is fixed based on the
prevailing rate of rent in the locality for the similar
building. The components of the fair rent depend upon
the market criteria related to fixation of fair rent.
These components are liable for changes and
fluctuations. The court has to advert to the market
criteria that might have become prevalent in the
locality and the date of commencement of such criteria
by marshalling the factors that require to establish
fair rent fixation. If those conditions exist as on
the date of application for fixation of fair rent,
necessarily, the court has to fix the fair rent as on
the date of application. In this case, documents
produced by the landlord clearly indicate that the rent
at the rate of Rs.30/- per sq.ft. was prevailing before
the application for fair rent. In such circumstances,
we are of the view that the fair rent that should have
been fixed, is from the date of application.
Accordingly, we affirm the decision of the Rent Control
Court and vacate the order passed by the Appellate
Authority, restricting fair rent from the date of
order.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.T.SANKARAN
&
THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE
THURSDAY, THE 23RD DAY OF OCTOBER 2014
RCRev..No. 420 of 2012 ()
K.S.KADAR PILLAI,
Vs
M/S. GOVEN TRAVELS
Citation;AIR 2015(NOC)24 kerala
The Rent Control Revisions 420/2012, 421/2012 and
422/2012 are filed at the instance of the landlord.
RCR No.118/2013 is filed by the tenant, who is the
respondent in RCR No.420/2012. These matters are
related to fair rent fixation of the buildings in
occupation of the tenants. The buildings form part of
a larger building situated in Ernakulam Town. Building
is lying facing M.G road as well as hospital road.
2. The common question in all these Rent Control
Revisions filed by the landlord is with respect to the
date from which fair rent shall be fixed and also
regarding the periodical enhancement. In RCR Nos.420
and 422 of 2012, the landlord also challenges fair rent
fixed by the Rent Controller. The tenant filed
R.C.R.No.118/2013 feeling aggrieved by rate of fixation
of fair rent.
3. Before entering into the subject matter of
rate of fair rent fixed in R.C.R.No.118/2013, the
common questions that arise in all other Rent Control
Revisions shall be considered together.
4. The Rent Control Court fixed fair rent from
the date of application with enhanced rate of rent of
10% in every two years. The Appellate Authority
restricted fixation of fair rent from date of order
passed by the Rent Controller and also vacated 10%
enhancement ordered by Rent Controller. In these
proceedings Rent Control Court relied on the lease
deeds executed in favour of the landlord by other
tenants, who were inducted in possession of the upstair
portion of the building in the year 2007-2009. The
above documents would indicate that the rent payable is
at Rs.30/- per Sq.ft. This Court in George v.T.K.Saidu
Muhammed [2013 (2) KHC 326] held that fixation of fair
rent is to be ordered by the Rent Control Court from
the date of application or petition. We are of the
view that rights and liabilities to the parties to the
lis have to be determined with reference to the date of
filing of the petition. However, in the matter
relating to the fair rent fixation there can be a
departure from such rule on finding that reliance
placed by the Landlord to fix the fair rent is based on
a material that has arisen subsequent to the filing of
petition. The fair rent is fixed based on the
prevailing rate of rent in the locality for the similar
building. The components of the fair rent depend upon
the market criteria related to fixation of fair rent.
These components are liable for changes and
fluctuations. The court has to advert to the market
criteria that might have become prevalent in the
locality and the date of commencement of such criteria
by marshalling the factors that require to establish
fair rent fixation. If those conditions exist as on
the date of application for fixation of fair rent,
necessarily, the court has to fix the fair rent as on
the date of application. In this case, documents
produced by the landlord clearly indicate that the rent
at the rate of Rs.30/- per sq.ft. was prevailing before
the application for fair rent. In such circumstances,
we are of the view that the fair rent that should have
been fixed, is from the date of application.
Accordingly, we affirm the decision of the Rent Control
Court and vacate the order passed by the Appellate
Authority, restricting fair rent from the date of
order.
5. Next common question is whether the Rent
Control Court is justified in granting periodical
enhancement at the rate of 10% in every two years. In
Sreekumaran Nair v.Ponnuswami Chettiyar [2010 (3) KLT
444], this Court held as follows:
"The question that survives for consideration
is whether the decision of the statutory
authorities to allow 10% increase per year can be
approved. The learned Rent Control Appellate
Authority noticed several relevant aspects such as
the value of money being on decline, corresponding
increase in the value of land, inflationary trends
in the economy and also the regular growth of the
city as a whole etc. These reasons, we also feel,
are good reasons which can justify the decision to
allow increase on the fair rent at a reasonable
rate at regular intervals."
6. We are also of the view that those factors can
be taken note of for periodical enhancement. But those
general factors are to be shown to exist while granting
periodical enhancement. The Rent Control Courts cannot
routinely allow reasonable modification to rates so
fixed. It has to be remembered that the right of the
landlord is not foreclosed by fixing a fair rent by the
Rent Control Court to approach the Court again for fair
rent fixation. The cause of action to fix fair rent is
a recurring cause of action depending upon factors that
warrant fixation of the fair rent. In extreme case,
there may warrant reduction of the fair rent so fixed
on account of the decrease in market transactions,
change of main avenue, shift of commercial activities,
diversion of main road etc., therefore, in such
situation it is not safe to award periodical increase.
We do not find any reason has been assigned by the Rent
Control Court in granting periodical enhancement.
Therefore, we affirm the decision of the Appellate
Authority in setting aside the periodical enhancement.
7. Next question is with regard to the fair rent
fixed with respect to the tenant in R.C.R.No.420/2012.
The Rent Controller fixed Rs.30/- per sq.ft. The
Appellate Authority reduced it to Rs.25/- based on the
admission by the tenant in the reply notice. The Rent
Control Court fixed the fair rent at Rs.30/- based on
the fact that upstair portions are let out at Rs.30/-
per sq.ft. However, it is to be noticed that the
building in occupation of the tenant in RCR
No.422/2012, the Rent Control Court fixed only Rs.28/-
per sq.ft. and there was no challenge by the land lord
against such fixation. The building in occupation of
tenant in RCR No.422/2012 is facing MG Road. There is
not much difference in rooms in occupation of the
tenants in RCR Nos.420 and 422 of 2012. It is to be
noted that there is no challenge by the tenant in RCR
No.421/2012 as against fair rent fixation. The fair
rent fixed in respect of the premises in R.C.R.No.
421/2012 is Rs.27/- per sq.ft. We consider, in such
circumstances, uniformity of fair rent fixation of
similarly situated buildings is warranted and fixing
different fair rent in respect of similarly situated
building having same advantage of commercial potential
is unsustainable. The activities of tenants are
commercial and buildings were let out for non
residential purpose. Advantages and disadvantages of
the building from commercial point of view are one and
the same. The slender advantages and disadvantages on
comparison cannot be a reason to fix different rate of
fair rent. Therefore, uniformity of the rate of fair
rent is appropriate in the facts and circumstances.
The landlord having not challenged fair rent fixed by
the Rent control Court in respect of the buildings
which are the subject matter of RCR Nos.421/2012 and
422/2012, we are of the view that the fair rent fixed
in R.C.R.No.421/2012 which was the lowest among the
fair rent fixed should be the ideal factor.
Accordingly, fair rent in respect of building which is
subject matter of RCR No.420/2012 is fixed at
Rs.19,656/- for 728 sq.ft. at the rate of Rs.27/-. The
fair rent in respect of the building in RCR No.422/2012
is fixed at Rs.18,630/- for 692 sq.ft. at the rate of
Rs.27/-.
8. In the result, the Rent Control Revision filed
by the tenant in RCR No.118/2013 is dismissed. RCR
Nos.421, 420 and 422 are allowed as follows:
The tenant in RCR No.420/2012 shall pay the fair
rent at the rate of Rs.19,656/-, from the date of
application. The tenant in RCR No.421/2012 shall pay
the fair rent fixed by the courts below from the date
of application. The tenant in RCR No.422/2012 shall
pay the fair rent at the rate of Rs.18,630/- from the
date of application. The claim for periodical
enhancement is declined with liberty to the landlord to
approach the Rent Control Court when fresh cause of
action arises for fair rent fixation.
9. A Division Bench of this Court in Issac Ninan
v. State of Kerala [1995 (2) KLT 848] declared Sections
5, 6 and 8 of the Kerala Building (Lease and Rent
Control) Act, 1965 (for short, the "Act") ultra vires
of the Constitution of India. Thereafter, in Edger
Ferus v. Abraham Ittycheria [2004 (1) KLT 767] another
Division Bench of this Court, based on the principles
of severability restored Section 5(1) of the Act and
held that Section 5(1) should remain in the statute
book enabling the Rent Control Court to fix fair rent.
In the light of the above, we do not see any reason for
not restoring Section 5(5) of the original Act which
was struck down along with the main provision in Issac
Ninan's case. Section 5(5) of the Act provides as
follows:
"5(5) The Rent Control Court shall intimate the
fair rent of the building fixed to the local
authority within whose jurisdiction the building
in respect of which the fair rent has been fixed,
is situated. The local authority on receipt of
such intimation shall make a record of the fair
rent fixed in the register kept for the purpose
and shall make the register available for
inspection in such places and in such manner as
may be prescribed. The register so prepared shall
be kept up-to-date so as to contain full
particulars in regard to the rent fixed in respect
of a building by the Rent Control Court and also
the subsequent variation thereto made by the said
court."
Therefore, we hereby restore Section 5(5) of the Act
and direct all Rent Control Courts to intimate the fair
rent fixed on the building to the local authority in
terms of Section 5(5) of the Act.
K.T.SANKARAN, JUDGE
A.MUHAMED MUSTAQUE, JUDGE
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