THE HON'BLE SRI JUSTICE B. VIJAYSEN REDDY
CIVIL REVISION PETITION No.3360 of 2018
ORDER:
This revision is filed challenging the order dated 05.02.2018 in R.A.No.103 of 2016 passed by the Additional Chief Judge, City Small Causes Court, Hyderabad, confirming the order dated 21.01.2016 in R.C.No.56 of 2014 passed by the I Additional Rent controller FAC Principal Rent Controller, Hyderabad.
2. The parties herein are referred to as tenant and landlady.
3. The petition in R.C.No.56 of 2014 was filed by the landlady under Section 4(1) of the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960, for enhancement of rent from Rs.2,700/- to Rs.12,500/- thereby fixing fair rent and progressive enhancement of 20% every two years on the existing rent of the shop bearing municipal Nos.22-5-275 and 22-5-275/1 admeasuring 250 sq. feet situated at Kalikaman, Hyderabad (hereinafter referred to as tenanted property). The RC was allowed by fixing fair rent at Rs.5,000/- per month i.e. 250 sq. feet x Rs.20/- = Rs.5,000/-, from the date of petition and further directed the enhancement of rent at 10% on the existing rent every two years. Aggrieved thereby, the tenant preferred an appeal in R.A.No.103 of 2016, which was dismissed confirming the order passed in R.C.No.56 of 2014.
4. The landlady pleaded that the tenanted property was leased out to the petitioners in the year 1997 on monthly rent of Rs.2,700/-; the tenancy is oral and month to month; the rent is payable on or before 5th of each succeeding month and tenant is running business of photo studio in the name and style M/s. Modern Photo Studio. It is further 2 pleaded that there has been a revolutionary change in the rate of rent, the value of the buildings, cost of construction and labour charges and the value of the land has increased leaps and bounds and the value of money has come down day by day and the premises in occupation of the tenant is totally commercial premises and situated in the heart of the City at Kalikaman, which is very near to Charminar and Lad Bazar, which is a famous market for bangles and textile business, wholesale and retail jewellery business, the market is busy right from morning to midnight; there are no shops available in the area after road widening; there are many banks and commercial establishments doing business after 2008; the entire area is developed after road widening; the tenanted property was obtained by the tenant 15 years ago and rent was not enhanced for several years; the market rental value will be around more than Rs.70/- per sq. feet. Thus, the tenant is liable to pay rent at Rs.12,500/- per month excluding electricity and municipal tax with regular enhancement at 20% every two years.
5. In the counter, the tenant stated that his father obtained the tenanted property on lease in the year 1962 on a rent of Rs.225/- per sq. feet exclusive of electricity consumption charges; the rent was enhanced to Rs.250/- in the year 1988 and there was enhancement of rent from time to time. From 2012, the rent was enhanced to Rs.2,700/- per month and thereafter, the rent was enhanced at 8% every year by the husband of the landlady.
6. P.W.1 was examined on behalf of the landlady and Exs.P1 to P1(a) were marked on her behalf. The tenant examined himself as R.W.1 and marked Exs.R1 to R6 (photographs along with CD).
7. Taking into consideration the oral and documentary evidence, the learned Rent Controller fixed the rental value for the tenanted 3 property at Rs.20/- per sq. feet, which worked out to Rs.5,000/- per month (250 sq. feet x Rs.20/- = Rs.5,000/-). The order of the learned Rent Controller was confirmed by the appellate Court by noting that the tenanted property is situated predominantly in a commercial locality, there are number of commercial shops apart from famous tourist places like Charminar, Gulzar House and Lad Bazar, one of the famous market for bangles and textiles, pearls and jewellery. The appellate Court upheld the order of the learned Rent Controller by holding that the learned Rent Controller had rightly taken judicial notice of enormous multifold increase of rent particularly in urban areas and determined the fair rent at Rs.20/- per sq. feet, which is just and reasonable.
8. Mr. R.A. Achuthanand, leaned counsel for the petitioner/tenant, submitted that the learned Rent Controller and the appellate Court exceeded jurisdiction; there is no evidence on record to prove the enhancement of rent as claimed by the landlady; the rent has to be fixed taking into consideration the date of the petition filed in RC; both the learned Rent Controller and the appellate Court tied to read more into the provision under Section 4 of the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960; the fixation of rent was contrary to the material evidence on record; in fact, P.W.1 admitted that he does not know the market value; the learned Rent Controller and the appellate Court do not have jurisdiction to fix successive or periodical enhancement as held by this Court in CRP.No.1650 of 2019; the decision relied upon by the learned Rent Controller in RATTAN ARYA v. STATE OF TAMIL NADU [AIR 1986 SC 1444] is not applicable to the facts of the present case and the order of the learned Rent Controller is without application of mind.
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9. Ms. Divya Mundra representing Mr. Damodar Mundra, learned counsel for the respondent, submitted that the tenanted property is located in a commercial area; the Court can take judicial notice of the development in the vicinity of the tenanted property; the learned Rent Controller has got jurisdiction to fix periodical enhancement of rent as per judgment of this Court in JUPUDI PARTHASARATHY v. KONDAPALLI RAJESWARI1. As per the law laid down by this Court, the landlady has opportunity to file only one petition for fixation/enhancement of fair rent under Section 4 of the Act. Thus, the learned Rent Controller has got jurisdiction to fix the periodical enhancement. No grounds have been made out by the tenant to interfere with the concurrent findings of both the Courts below.
10. In reply, the learned counsel for the petitioner submitted that that there is no evidence of annual enhancement of rent in the vicinity of the tenanted property. The property tax is paid by the tenant and the enhancement of rent cannot be a bonanza to the landlady.
11. In the light of the rival submissions two issues arise for consideration in this revision:
1. Whether fixation of fair rent for the tenanted property at Rs.5,000/- per month by the learned Rent Controller and confirmed by the Appellate Court suffer from any illegality or irregularity.
2. Whether periodical enhancement at 10% on the existing rent every two years as directed by the learned Rent Controller and confirmed by the Appellate Court is justified.
ISSUE No.1:
12. The landlady has not relied on any documentary evidence to prove the quantum of rent paid for similarly situated premises in the 1 2008 (6) ALD 398 5 vicinity of the tenanted property. There is also no evidence to prove the market value of the tenanted property or similarly situated properties and the reasonable rent that can be fetched.
13. P.W.1 is the son of the landlady. He stated that the monthly rent was Rs.2,700/- in the year 1997. The prevailing market rent is Rs.70/- per sq. feet; the tenant was carrying on the business of photo studio and he was in occupation of 250 sq. feet; the property tax is regularly enhanced at 20% every two years; the tenant is liable to pay rent at Rs.12,500/- per month including electricity and municipal charges.
14. The tenant, as R.W.1, stated that the property is situated inside Kalikaman and there is no demand for non-residential premises; Kalikaman is predominantly a residential area; the claim of the landlady that it is a commercial area is not true; the tenanted property is situated ten shops from Gulzar House and that the distance between Charminar and Gulzar House is nearly one kilometer; one can take photograph of Charminar by standing at Gulzar House; R.W.1 denied that Gulzar House is world famous for business of pearls; he admitted that Syndicate Bank was situated near the tenanted property; however, he stated that the bank at present was under lock and key; he also denied that Axis Bank and Telangana Grameena Bank are situated adjacent to the tenanted property; at the same breath, he admitted that there is a Deccan Diagnostic Center near Kalikaman and after construction of new building, he is doing new business in the petition schedule property and presently, paying rent of Rs.2,700/-.
15. In the light of the above evidence, there cannot be any iota of doubt that Kalikaman area where the tenanted property is situated is a commercial area. Gulzar House is a popular commercial locality in 6 Hyderabad and as admitted by R.W.1, it is about 1 KM from Charminar. In RATTAN ARYA's case (supra) the Supreme Court held as under:
"4. ... We must also observe here that whatever justification there may have been in 1973 when Section 30(ii) was amended by imposing a ceiling of Rs 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country, particularly in urban areas ..."
16. The appellate Court in para 8 of the impugned judgment extracted the periodical enhancement of rent in a tabulated form. The rent of the tenanted property was Rs.2,000/- per month in the year 2009; Rs.2,300/- per month in the year 2011; Rs.2500/- per month in the year 2012 and Rs.2,700/- per month from 2012 onwards. Even by admission of R.W.1, the rent was enhanced at 8% every year. Therefore, fixation of rent at Rs.20/- per sq. feet for 250 sq. feet (tenanted shop) coming to Rs.5,000/- per month is fair and reasonable.
Issue No.1 is answered accordingly.
ISSUE No.2:
17. The decisions, relied upon by the learned counsel for the petitioner in support of his contentions, are discussed below.
In CRP.No.1650 of 2019 vide order dated 30.08.2019, this Court held as follows in paras 57 and 58:
"57. As far as such periodical enhancement is concerned, the landlord would again have to seek for increase in fair rent and he cannot seek such enhancement except in cases where some addition, improvement or alteration has been carried out at the landlord's expense. (See Section 5 of the Act). Under Section 5 of the Act, the enhancement can only be at a rate per annum 7 not exceeding 6% of the cost of such addition, improvement, or alteration.
58. So only the direction of the Rent Controller in regard to the enhancement of rent at 10% for every two (02) years from the date of filing of the R.C., i.e., 29.09.2009, which was confirmed by the Appellate Authority, is set aside. "
In MOHD. OSMAN v. D. SHAKUNTALA BAI (DIED), (CRP.Nos.1100 and 1226 of 2018 dated 03.06.2019), it was held in para 60 as under:
"60. However, the provision for periodical enhancement of rent at 10% for every two years on the existing rent from the date of filing of the R.C. granted by the appellate authority is not proper since any enhancement can be directed under Section 5 of the Act only if there is any addition, improvement or alteration carried out at the instance of the respondents at the request of the petitioner. Therefore the said direction is set aside."
In MAHENDER KUMAR GANDHI v. BINDESH KAMDAR2 it was held at para 49 as under:
"49. In view of discussion hereinabove, I hold that the landlord or tenant are not entitled to file petition under Section 4 of A.P. Act, 1960 for fixation of fair rent, when fair rent or standard rent was fixed earlier between the same landlord and tenant under the same tenancy, since fixation of fair rent is one time measure in view of bar under Section 5(1) of A.P. Act, 1960 and in view of the law declared by the Apex Court in Raichurmatham Prabhakar's case (referred supra). Section 5(1) of A.P. Act, 1960 also deals with increase in fair rent is admissible when the fair rent of a building has been fixed under this Act, no further increase in such fair rent shall be permissible except in cases where some additional, improvement or alteration has been carried out at the landlord's expense and if the building is then in the occupation of a tenant, at his request. Accordingly, the point is answered.2
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18. Learned counsel for the petitioner fairly submitted that the decisions referred to above are in conflict with the decision of another learned Single Judge of this Court in JUPUDI PARTHASARATHY's case(1 supra) wherein it was held as para 5 as under:
"5. In the light of the above, I have considered this matter earnestly. Sections 4 to 6 of the Act provided for entire mechanism relating to fixation of fair rent. It is, no doubt, true that the criteria fixed under Sub-sections (2) to (4) of Section 4 of the Act was held to have become illusory and accordingly struck down in the above referred decision of Suresh Gir's case (supra). The striking down of Sub-sections (2) to (4) of Section 4 of the Act was primarily on the ground that the criteria provided for working of sub-sections has been rendered illusory on account of passage of time. It is unfortunate that the legislature has not amended the Section 4 of the Act thereafter to provide realistic criteria in place of Sub-sections (2) to (4) of Section 4 of the Act which existed earlier. In any event, since Sub-section (1) of Section 4 of the Act is valid and upheld, the Rent Controller would be fully justified in fixing the rent on the criteria of "just and reasonable" as laid down in the aforesaid decision of Suresh Gir's case (supra). Thus the power of the Rent Controller to fix the fair rent cannot be disputed. Similarly once the power to fix the rent is considered, the periodical increase of rent is also part of that power. It has to be remembered that the Rent Controller was fixing the rent as on the date of application by the landlord which preceded couple of years before the actual fixation of fair rent ... I do not, therefore, think that there is any error committed by the Rent Controller in ordering for periodical increase over the rent freshly fixed by it. In the case on hand itself it is apparent that the application for fixation of fair rent was made on 13.5.1992, but the order of the Rent Controller fixing the rent was passed only in 1999 i.e., more than seven years have passed and the said period of seven years had to be taken into account by the Rent Controller while fixing the periodical increase over the fair rent fixed as on the date of the application ... the landlord would be compelled to approach the Court for fixation of rent repeatedly as the rent sought to be fixed as on the date of the application has to be finally adjudicated after lapse of couple of years and by the time final adjudication is made, fixation of rent which was sought for would become unrealistic on account 9 of passage of time and escalation in rental values of the buildings ... In this view of the matter, therefore I am of the opinion that to offset the time gap between the date of application and the date of adjudication, the Rent Controller would certainly have jurisdiction to order the periodical increase in the fair rent as has been done in this case. What the quantum of such periodical increase as to whether it should be 5% or 10% or more would have to be taken by the facts of each case. Even in Suresh Gir's case (supra), the Division Bench of this Court in para-41 has interpreted the concept of fair rent to mean that it should be synonymous with 'reasonable rent' - reasonable from the point of view of both tenant and landlord ..."
19. Taking into consideration the evidence let in by the parties, this Court is of the view that the landlady has not adduced any cogent evidence to seek periodical enhancement of rent. The last paid rent by the tenant was Rs.2,700/- per month from 2012 onwards. The learned Rent Controller fixed the rent at Rs.5,000/- per moth. The periodical enhancement cannot be a guessing work unless there is concrete evidence to that effect. Situation would have been different if the landlady was able to adduce any evidence to prove periodical enhancement in the vicinity. There was no evidence, as pointed above, to prove the prevailing rent of the similarly situated shops. On the basis of the commercial lease, the learned Rent Controller fixed the rent at Rs.5,000/- per month but periodical enhancement is altogether a different aspect and factors for such periodical enhancement differ from place to place and also depend on the nature of business carried on in the tenanted property.
20. In the light of the above observations, the periodical enhancement at 10% every two years as ordered by the learned Rent Controller and confirmed by the appellate Court is set aside.
Issue No.2 is answered accordingly.
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21. In view of this Court holding, on facts, that there is no evidence to substantiate periodical enhancement of rent, this Court is not going into the applicability of the ratio laid down in the above decisions discussed in issue No.2.
The civil revision petition is allowed in part. Pending miscellaneous petitions, if any, shall stand closed. There shall be no order as to costs.
__________________ B. VIJAYSEN REDDY, J July 29, 2021 DSK