Pearey Lal And Sons (P) Ltd. vs Goodwill India Ltd.
2005 Latest Caselaw 640 Del

JUDGMENT

O.P. Dwivedi, J.

1. By this petition under Article 227 of the Constitution of India, the petitioner seeks quashing of the order dated 20.4.2001, passed by the Additional Rent Control Tribunal whereby the learned Additional Rent Controller's order dated 30.8.1999, dismissing the standard rent petition of the respondent was set aside and the case and remanded back to the learned ARC for decision afresh in accordance with law after considering the provisions of Section 76(h) of the Transfer of Property Act.

2. Briefly narrated, the facts leading to this petition are that the petitioner herein executed a mortgage deed dated 27.2.1973, in favor of the respondent in respect of the space comprising of 2200 sq.ft forming part of the third floor of the building known as 13-29, Block E, Harsha Bhawan, Connaught Place, New Delhi. The property was mortgaged for 25 years against a loan of Rs.3 lakhs. Clause 6 of the mortgage deed stipulated that in the event of mortgage being redeemed by the mortgagor within the period specified therein, the mortgagee shall become the tenant for two years on rent from the date of redemption. The mortgagor agreed to execute the lease in favor of the mortgagee. It was further stipulated that the standard rent under the Rent Control Act will be the agreed rent. The mortgage deed further stipulated that the possession of the mortgaged property will remain with the mortgagee who was authorised to enjoy the same or any income there from and to appropriate the same towards the interest without any liability to account for the same. Before the expiry of said period of 25 years, the petitioner wrote a letter dated 23.2.1998 to the respondent for redemption of mortgage and a pay order of Rs.3 lakhs drawn on the Bank of India, Janpath, New Delhi was also sent along with the letter. The letter was duly received by the respondent who, however, claimed to have become the owner of the property as the redemption was not in accordance with law. The petitioner then filed a suit in this Court for redemption of mortgage which is still pending.

3. On 6.4.1999, the respondent herein filed a petition for fixation of standard rent before the Rent Controller. It was alleged in the petition that question as to whether the petitioner is entitled to redeem the property or whether the respondent has become owner thereof is pending adjudication in this Court in suit no.1430/1998. Clause 6 of the mortgage deed stipulated that on redemption of mortgagee, the respondent shall became the tenant of mortgaged property for a period of 2 years. Therefore, the respondent is filing this petition for fixation of standard rent. It appears from the record that despite several opportunities given to the petitioner written statement was not filed and the petitioner's defense was struck off. The respondent examined two witnesses. It may be pointed out here that in the said suit Division Bench of this Court had passed an order dated 27.5.1999, directing the Rent Controller to dispose of the standard rent petition within three months. It appears that being under pressure of this order learned ARC rushed to close the evidence of the respondent without availing the services of any independent valuer under the provisions of Section 9(2) of the DRC Act. Eventually, learned ARC dismissed that standard rent petition vide order dated 30.8.1999 being of the view that the respondent had failed to produce any evidence regarding cost of construction and the value of the land and there is no other material on record to fix the standard rent under Section 9(4) of the DRC Act.

4. Feeling aggrieved, the respondent preferred appeal RCA No.631/1999, before the Rent Control Tribunal. It was contended by the respondents that standard rent should have been fixed under the provisions of Section 6(1)(B)(2)(b) on the basis of cost of construction and the value of the land. However, learned Tribunal in para 29 of the impugned order observed that since Section 6(2) begins with a non-obstante clause, it will exclude the application of sub section (1) of Section 6 of the DRC Act and therefore, standard rent could not have been fixed under Section 6(1)(B)(2)(b) of the Act because the premises in dispute has been let out after 9th day of June, 1955 and before commencement of Delhi Rent Control (Amendment) Act, 1988. Therefore, standard rent will have to be fixed under section 6(2)(b) by ascertaining the fair occupation rent as contemplated under section 76(h) of the T.P. Act. This according to the Tribunal could be done by ascertaining the value of the land on the basis of the rates fixed by the government for different areas and the cost of construction on the basis of CPWD schedule. The Tribunal further observed that the learned ARC could not have rushed through the procedure because of three months time limit set by this Court and he should have asked for extension of time. Accordingly, the learned Tribunal allowed the appeal, set aside the order dated 30.8.1999 and remanded the case with a direction to fix the standard rent after taking into consideration the provisions of Section 76(h) of the Transfer of Property Act also. Feeling aggrieved, the petitioner has filed this petition.

5. I have heard, learned counsel for the parties and perused the record.

6. Dr. Singhvi, learned senior counsel for the petitioner contended that invocation of Section 76(h) of the Transfer of Property Act by the Tribunal for fixation of standard rent was totally uncalled for. Besides, according to the learned counsel, the prevalent rent in the area is between Rs.25 to Rs.45 per sq.ft. Therefore, even on a modest estimate the standard rent calculated under Section 9(4) of the DRC Act, would come to much more than Rs.3500/- per month and therefore, the learned ARC will have no jurisdiction to deal with the petition. Learned counsel further suggested that before disposing of the petition, a report may be called from the ARC as to what would be the tentative standard rent because in case it exceeds Rs.3500 per month, the petition will have to be dismissed for want of jurisdiction. An order without jurisdiction will be in nullity (AIR 1954 SC 340).

7. Having considered the respective submissions of the learned counsel for the parties in the light of the material on record and the relevant statutory provisions, I find myself fully in agreement with Dr. Singhvi as regards his contention that invocation of Section 76(h) of the Transfer of Property Act by Tribunal for fixation of standard rent was totally uncalled for. Section 76(h) requires the mortgagee in possession of the mortgaged property to debit the receipts from the mortgage property or where such property is personally occupied by him, a fair occupation rent in respect thereof to the credit of the mortgagor and this has to be done for reduction of amount from time to time due to him on account of interest. If the property is self occupied by the mortgagee, a fair occupation rent in respect thereof will have to be credited to the account of mortgagor. In the present case, there was specific stipulation in the mortgage deed to effect that the mortgagee may enjoy the property themselves or the entire income received there from be appropriated towards interest without any liability to account for the same (clause 2 of the mortgage deed). In view of this stipulation, contained in the mortgage deed, the question of debiting any amount on account of fair occupation rent in favor of the mortgagor for reduction of amount of interest does not arise. Under the terms of mortgage deed, the petitioner was not required to pay any interest to the mortgagee and in lieu thereof the income if any from the property was to be retained or enjoyed by the mortgagee without any liability to account for the same. Besides if the fair occupation rent is to be calculated either on the basis of rent prevalent in the market at the relevant time or on the basis of estimated value of the property to be calculated on the basis of the value of the land underneath the premises and cost of construction as observed in para 30 and 31 of the impugned order, I wonder how it is going to be any different from the standard rent to be determined on the basis of the criteria laid down under section 6(1)(B) 2(b) or under section 9(4) of the Delhi Rent Control Act. Instead of clarifying the position in this regard, the direction of the learned Tribunal that section 7(h) of T.P. Act be taken into consideration, has made the matter more compounded.

8. In this case the respondent had placed on record a copy of the objections against assessment order which were filed by the petitioner themselves. This document has been proved as Ex PW2/2 by an official of the NDMC. Learned ARC, however, ignored it with the observation that this document has not been formally proved. This purports to be a document submitted by the petitioner themselves before the NDMC and this fact does not appears to have been disputed before the learned ARC. By producing this document, the respondent was actually relying upon the document relied upon by the other side in some other proceedings. Obviously this could very well be relied upon by the respondent and the question of onus to prove in these circumstances pails into insignificance. In paras 1 and 2 of Ex PW2/2, the petitioner herein has disclosed value of the land and also the cost of construction. The construction had commenced in the year 1968. A perusal of page 2 of this document shows that the portion in occupation of the respondent, namely, part of the third floor was constructed in phase I. All that the learned ARC was required to do was to ascertain its proportionate cost of construction in respect of premises in question which is comprises of 2200 sq.ft on the third floor as also proportionate value of the land underneath. Therefore, in my view, the dismissal of the petition on the ground that no evidence has been produced to prove the cost of land and the cost of construction is totally unjustified.

9. At this stage, the question as to whether the standard rent should be determined under Section section 6(1)(B) 2(b) or under Section 6(2)(b) of the DRC Act, also needs clarification. According to the learned Tribunal (para 29 of the impugned order), Section 6(2) begins with a non-obstante clause and since the building was constructed after 9.6.1955 but before the commencement of the Delhi Rent Control Amendment Act, 1988, the standard rent will have to be calculated on the basis of annual rent agreed upon between the parties when the premises are first let out. Thus, according to the Tribunal, the standard rent will have to be fixed under Section section 6(2)(b) and not under section 6(1)(B) 2(b). I am unable to agree with this reasoning of learned Tribunal. Section 6(2)(b) of the Act can be invoked when (i) the property has been constructed after 9th day of June 1955 and before the commencement of Delhi Rent Control Amendment Act, 1988 and (ii) there is agreed rent between the parties at the time of first letting after the construction. In the present case, there is nothing like agreed rent between the parties. Clause 6 of the mortgage deed stipulated that on the redemption of mortgage by the mortgagor, the mortgage shall became tenant for two years and rent will be the standard rent calculated in accordance with the provisions of Rent Control Act. Thus there was no agreed rate of rent between the parties. Therefore, Section 6(2)(b) cannot be invoked to determine the standard rent. The non-obstenate clause with which Section 6(2) begins, therefore, does not operate. It, therefore, follows that standard rent will have to be determined either under Section section 6(1)(B) 2(b) or under Section 9(4) of the RC Act. As already noticed, in the present case there is definite evidence (ExPW 2/2) on the basis of which the learned ARC could have ascertained the cost of construction and value of land at the time of commencement of construction and could have determined the standard rent accordingly, under the provisions of section 6(1)(B) 2(b). If some clarification for this purpose was needed, the learned ARC could have sought it by examining the parties under Order 10 Rule 2 CPC. In any case recourse could be had to proviso to Section 9(2) of the DRC Act by taking help of the government approved valuer to ascertain the cost of construction and the price of land. Learned ARC should not have by passed the provisions just because of the time constraint imposed by the High Court vide order dated 27.5.1999. Rather the learned ARC should have sought extension of time as has been rightly observed by the learned Tribunal.

10. It is settled law that it is the duty of the Controller to determine the standard rent once a petition is brought before him for this purpose. In the present case, there was petitioner's own document (PW 2/2) on the basis of which learned ARC could have proportionately calculated the cost of construction and the value of land underneath. He could have sought necessary clarification from the petitioner herein in this regard or could have sought the help of the government approved valuer. The learned AC, however, simply rushed through the procedure because of the time constraint ignoring the evidence already on record. In the circumstances of the case, I think learned Tribunal's order remanding the case back to learned ARC for the fresh decision in accordance with law is fully justified but the direction to take into consideration the provisions of Section 76(h) of the Transfer of Property Act is unwarranted.

11. Mr. Sapra, learned counsel for the respondent contended that even if the standard rent comes to more than Rs.3500/- p.m., learned ARC will have to determine it without dismissing the petition for want of jurisdiction in view of the High Court's order dated 27.5.1999. According to Mr. Sapra, since this Court's order dated 27.5.1999 mandates the ARC to determine the standard rent, this exercise has to be gone into by the learned ARC irrespective of the fact that the standard rent comes to more than Rs.3500- p.m. While making this submission, I think, Mr. Sapra had in mind Clause 6 of the mortgage deed which stipulates that the standard rent under the Rent Control Act will govern the tenancy for 2 years after the redemption of mortgage by mortgagor. But this argument overlooks one important aspect. The standard rent petition in this case was filed on 6.4.1999 whereas the High Court's order for fixation of standard rent within 3 months is dated 27.5.1999. It is obvious that the standard rent was required to be fixed because of the filing of this petition and not because of the High Court's order. High Court's order dated 27.5.1999 only sets down a time limit, it does not confer jurisdiction on the ARC to determine standard rent. Jurisdiction to determine standard rent is conferred by Section 9 of DRC Act and not by the High Court's order dated 27.5.1999. This contention of learned counsel for respondent is, therefore, repelled.

12. In the result, this petition fails and the impugned order of remand passed by Ld. Tribunal is hereby maintained but the direction to take into consideration the provisions of Section 76(h) of the Transfer of Property Act is deleted. Learned ARC shall determine the standard rent in accordance with provision of Delhi Rent Control Act and for this purpose he may take into consideration the document Ex.PW2/2 for ascertaining the proportionate cost of construction and the value of land and may also seek any clarification from the parties or take help of the government approved valuers. Needless to say that learned ARC shall expedite the disposal of the petition and seek extension of time from the High Court, if required. If the learned ARC comes to the conclusion that the estimated standard rent comes to more than Rs.3500/- p.m, he will have no jurisdiction to deal with the matter in view of Section 3(c) of DRC Act. He will then pass appropriate orders in accordance with law.