RUKMANIBAI KHIMJI COOVERJI Vs. SHIVNARAYAN RAM ASHRE

JUDGEMENT

(1.) IN these revisional applications and also in several other revisional applications on the file of this Court, the question of considerable interest under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as 'the Act'), that has arisen is -whether in connection with premises first let after September 1, 1940, the standard rent should be ascertained as regards the land involved by determining fair return on the basis (i) of the market value of the land at the time of the first letting, or (ii) of the price paid and/or investments made at the time of purchase of the land at anterior date. On behalf of the landlady, petitioner No. 1 in the present revisional applications, it is contended that the basis should be the market value of the land at the time of the first letting after September 1, 1940. On behalf of the respondents -tenants, it is contended that the basis must be the price paid and/or investments made for the purchase of the land at anterior date.

(2.) IN these revisional applications, the question has arisen under the following circumstances: -Petitioner No. 1 is the owner of two buildings called Khimji Cooverji Chawls situate at Carter Road, Mulund. The land on which these two buildings were constructed was purchased by the husband of petitioner No. 1, Khimji Cooverji, under a deed of sale dated November 18, 1946. The land consisted of 2000 square yards. 1813 square yards of this land were used up in putting up the total construction of the above two buildings. The rest of the area had to be kept unbuilt upon because of the municipal regulations requiring that certain proportion of the land should be kept open to the sky. Thus, 187 square yards remained unbuilt upon. The first building was constructed and completed in 1949. The second building was constructed and completed in 1951 -52. Soon after the completion of construction, the tenements in each building were let out to the tenants. In the first building, there are 18 tenements in all. One tenement is occupied by the owner herself. In the second building, there are J. 7 tenements. Tenements in these buildings are let out to tenants at monthly rents varying between Rs. 29 to Rs. 70 per month. Twelve tenants in each of the buildings commenced proceedings in the Court of Civil Judge, Junior, Division, Tirana, for determination of standard rent of the premises and/or tenements in their occupation. As regards the ascertainment of the fair return on the value of the land on which these buildings were constructed, on behalf of the tenants, the contention before us is that the value should be fixed on the footing of the price paid for the purchase of the land under the deed of sale dated November 18, 1946. On behalf of petitioner No. 1 landlady, the contention before us is that the value of the land in connection with ascertainment of the standard rent ought to be fixed as at the date of the first letting of the tenements in these buildings. In connection with the first building, the construction whereof was completed in 1949, the value should be ascertained on the basis of the market value of the land in 1949. As regards the second building, the value should be ascertained on the basis of the market value thereof on the date of the first letting1 in 1950 -51.

(3.) ON behalf of the landlady, it is contended with some emphasis that having regard to the provisions in the Act, in the ascertainment of the fair return on the value of the land involved, the basis ought to be the value as at the date of the first letting after September 1, 1940. Reliance is placed in that connection on the provisions in Sections 5(10) and 11 as also Sections 13(7)(hh), 13(7)(i), 13(7)(ii) and 13A and also certain other provisions of the Act. Section 5(10) defines 'standard rent' to mean - (a)... rent...fixed by the Court and the Controller...; or (b) where the standard rent is not so fixed -subject to the provisions of Section 11, (1) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iv) in any of the cases specified in Section 11, the rent fixed by the Court; The relevant part of Section 11 provides: 11. (i) Subject to the provisions of Section 11A in any of the following cases the Court may,..., fix the standard rent at such amount as, having regard to the provisions of this Act and the circumstances of the case, the Court deems just - (a) where any premises are first let after the first day of September 1940, and the rent at which they are so let is in the opinion of the Court excessive; or (b) ...; or (c) ...; or (d) where any premises have been or are let rent -free or at a nominal rent or for some consideration in addition to rent; or (e) where there is any dispute between the landlord and the tenant regarding the amount of standard rent. (2) ... (3) ...; Having - regard to the above provisions in Sections 5(70) and 11, it is not in dispute between the parties that in cases where premises are first let after September 1, 1940, in proceedings for fixation of standard rent, Court should have regard to (i) the provisions of the Act, (ii) the circumstances of the case and (iii) the amount fixed should be just. The main contention on behalf of the tenants is that the provisions of the Act show that 'the Legislature wanted to disallow any increase in value of the lands and/or rents as existing in 1941'. The submission is that the value and/or prices prevalent in 1941 are the standard prices, on the basis whereof, the standard rents are liable to be fixed in. respect of all the properties. According to this submission, in. connection with ascertainment of standard rent, it is not permissible under the Act to consider any unearned increment and/or rise in value of the lands after 1941. This being the policy of the Act, the basis for fair return on the value of lands in determining standard rent must be the value thereof at the date of purchase. The value must be on the footing of investments made at the date of purchase.