Sunday 1 February 2015

Whether different fair rent can be fixed in respect of similarly situated building?


   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.
  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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