Canara Bank v. Deva Properties Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **THURSDAY, THE 19TH DAY OF NOVEMBER 2020 / 28TH KARTHIKA, 1942** ## **RCRev.No.183 OF 2020** **AGAINST THE JUDGMENT IN RCA 11/2019 OF RENT CONTROL APPELLATE AUTHORITY, THIRUVANANTHAPURAM** **AGAINST THE ORDER IN RCP 64/2009 OF RENT CONTROL COURT, THIRUVANANTHAPURAM** ## **REVISION PETITIONERS/APPELLANTS/RESPONDENTS:** - **1 M/s.CANARA BANK REPRESENTED BY ITS DEPUTY GENERAL MANAGER, DESI ROAD, BANGALORE.** - **2 THE GENERAL MANAGER, CANARA BANK, DESI ROAD, BANGALORE.** - **3 DEPUTY GENERAL MANAGER, CANARA BANK, BANGALORE,** **PETITIONERS 1 TO 3 REPRESENTED BY AUTHORIZED SIGNATORY -SENIOR MANAGER, CANARA BANK, CIRCLE OFFICE, THIRUVANANTHAPURAM.** - **4 THE MANAGER, CANARA BANK, SPENCER JUNCTION, THIRUVANANTHAPURAM.** R.C.R. No.183/20 ## **-:2:-** **BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.RAJA KANNAN SMT.PARVATHY KOTTOL** ## **RESPONDENT/RESPONDENT/PETITIONER IN RCP:** **DEVA PROPERTIES LIMITED ANNA SALAI, CHENNAI, REPRESENTED BY ITS MANAGING DIRECTOR K.VENUGOPALAN NAIR, ORIGINALLY KNOWN AND INCORPORATED AS M/S. SPENCER ESTATE LTD., ANNASALAI, CHENNAI-600002** **R1 BY ADV. PRAVEEN K.JOY(CAVEATOR)** **THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 13-11-2020, THE COURT ON 19-11-2020 PASSED THE FOLLOWING:** R.C.R. No.183/20 ## **-:3:-** ## **ORDER** Dated this the 19[th] day of November, 2020 ## _Bechu Kurian Thomas, J._ The tenant challenges the fixation of fair rent for the building leased to it by the landlord as per Ext.P4 lease deed dated 25.06.1993. The rate fixed by the Rent Controller is Rs.35/- per Sq.ft., which is affirmed by the Appellate Authority. This is the second round of litigation. In the earlier round, when the Rent Control Court fixed the fair rent at Rs.40/- per Sq.ft., this Court interfered with the quantum and remanded the matter for reconsideration and determination of the quantum of rent alone. While remanding the case, this Court affirmed the locus standi of the landlord to maintain the petition for fixation of fair rent and also their entitlement to get the rent re-fixed. Remand as per judgment in R.C.R. No.154 of 2014 was for the limited purpose of fixing the quantum of fair rent. 2. The tenant is in occupation of the building from 1994 onwards at a rent of Rs.4.20 per Sq.ft. The building is a modern concrete structure having nine floors with a basement and adequate car parking space situated in the heart of Thiruvananthapuram - the State capital. Pointing out that the R.C.R. No.183/20 ## **-:4:-** building, situated within a stone's throw from the Government Secretariat, is a very valuable property, the landlord claimed that the building would fetch, in 2009, at least Rs.45/- per Sq.ft. and requested the Rent Control Court to fix the fair rent. 3. Tenant, is a scheduled bank, occupying seven floors of the building, including the ground floor. It is alleged that the fair rent cannot be fixed as the rent is, as per the agreement, crystallized for a period of 99 years, and hence the petition itself was not maintainable. Apart from challenging the locus standi of the landlord to seek enhancement of rent, the tenant alleged that the security deposit of Rs.1,57,64,850/- deposited with the landlord was indicative of the intention of the parties for not increasing the rent for the entire period of the lease. 4. As mentioned earlier, initially, Rent Control Court fixed the fair rent at Rs.40/- per Sq.ft., but this Court remanded the matter for fresh consideration, solely for the purpose of fixing the fair rent. After remand, the parties adduced further evidence. Thus, the evidence consists of PW1 and Exts.A1 to A21, marked on behalf of the landlord, while CPW1 and CPW2 were examined and Exts.B1 to B21 marked on behalf of the tenant. Advocate Commission Report was marked as Ext.C1. The Rent Control Court fixed the fair rent of the building at Rs.35/- per Sq.ft., which R.C.R. No.183/20 **-:5:-** was affirmed by the Appellate Authority. Tenant challenges the fixation of fair rent in this revision petition. 5. The learned Senior Counsel Adv. E.K.Nandakumar, vehemently contended that the impugned judgments are exfacie incorrect and unsustainable. The learned Senior Counsel raised four main points of arguments. (1) that the huge security deposit is indicative of the intention of the parties to crystalize rent for the period of the lease, the impact of which was not considered by the courts below, (2) that the fixation of a uniform rent for all the seven floors of the building having a total rental area of 34,000 Sq.ft. was highly arbitrary and reliance was placed upon the judgment of this Court in R.C.R. No.311 of 2016, (3) that the biennial increase of 10% rent from the existing rent does not reflect the manner of increase of rent in the locality, and, (4) that the locality was slowly losing its significance as far as rentals are concerned and hence the rent ought to be decreased instead of increasing. 6. Adv. Praveen K. Joy appearing on behalf of the caveator, on the other hand, submits that the contentions raised have no bearing at all, as all the arguments raised had already been considered by the courts below and the same being findings of fact, they do not warrant any interference in the revisional R.C.R. No.183/20 ## **-:6:-** jurisdiction of this Court under Section 20 of the Kerala Building (Lease and Rent Control) Act 1965. He further submitted that the security deposit has no bearing upon the rent liable to be paid by the tenant. It was further submitted that the location of the building has a significant bearing on the rent and in that context the learned counsel referred to the commission report. It was further argued that the importance of the locality was in fact increasing day by day and that with the facilities available in the building, in such a prime location, the rent presently fixed is too low. The learned counsel further argued that a uniform rent was fixed since even at the time when the building was originally let, no variable or separate rent was fixed for each floor and instead the same rent was fixed for the area leased and the same does not call for any interference in this revisional jurisdiction. 7. We have considered the arguments raised at the bar and have also perused the judgments of both the authorities under the Act. 8. It is not disputed that the building involved in the case is situated in a locality of extreme importance in Thiruvananthapuram. The building faces the main arterial road of Thiruvananthapuram – M.G.Road. The Government Secretariat is a few meters away. The scheduled building is surrounded by R.C.R. No.183/20 ## **-:7:-** several extremely important institutions like the University College, the Hotel South Park, the Sanskrit College, the historic VJT Hall, the Kerala University Campus, the MLA Quarters, the Audit Bhavan, the Accountant General's Office, the Cantonment Police Station, a Church etc. There cannot be a more prime location in Thiruvananthapuram, than where the building is. Admittedly the rent being paid at the time of filing the petition for fixation of fair rent was only Rs.4.20 per sq.ft.,uniformly for all floors. No doubt the rent is ridiculously low. Thus, the finding that the fair rent has to be fixed for the building and the rent that was presently being paid was too low, cannot be interfered with. In fact the entitlement for refixation of rent was already concluded by this Court in the earlier round of litigation. 9. Then the question arises as to what should be the fair rent. This Court had in **Edger Ferus v. Abraham Ettycheria** (2004 (1) KLT 767) laid down the parameters for fixing the fair rent. Amongst the parameters laid down, the locational importance, nature of the tenanted premises, other advantages, and amenities including access to places of public importance were some of the guiding factors. The prevailing rent in the locality for same and similar accommodation was also another aspect that was identified as a factor to be reckoned with, while R.C.R. No.183/20 ## **-:8:-** determining the fair rent. 10. With the aforesaid parameters laid down in the decision cited above, it can be seen that, the building is situated in one of the most important localities in the capital city of Kerala. The landlord after remand had produced Ext.A11, Ext.A15 and Ext.A16 to prove the probable rent of the building. Ext.A15 is a registered rent agreement of a part of the very same building, for the period 2005-2008 in which the rent is fixed at Rs.40/- per Sq.ft. Ext.A11, Ext.A15, and Ext.A16 relate to the same building. Ext.B6, related to an adjacent building occupied by another scheduled bank in which the rate of rent from 2014 to 2019 is shown as Rs.37.50. Though Ext.A11, Ext.A15, and Ext.A16, and even Ext.B6 are not conclusive while deciding the fair rent to be fixed for the scheduled building, the same are all guiding factors for the court while arriving at the quantum of fair rent to be fixed. The conclusion rendered by the Rent Controller on Ext.B6 i.e., the document is not proved cannot be lost sight of by this Court. In cases of this nature, both the parties adduce evidence in support of their respective pleas. Keeping aside the evidence adduced by the landlord in support of its claim for fixation of rent at Rs.45/-, the challenge of the tenant against the fixation of fair rent legally begs the question, in as much as, the tenant had R.C.R. No.183/20 ## **-:9:-** failed to adduce evidence on the pleadings it has made. 11. The Rent Controller had, by taking into reckoning the aforesaid rental agreements, location and proximity of the building to other important buildings, availability of basement car parking as well as car parking on the sides of the building, availability of generator, electricity, and water, determined Rs.35/- per Sq.ft. as fair rent for the scheduled building. It is inevitable that while fixing the fair rent, the Rent Controller will have to be guided by a practical approach. It is not possible to fix the fair rent by the court with mathematical precision and exactitude. Since the Rent Controller was considering a fair rent of a building for the year 2009, reliance was placed upon Ext.A15, which is a registered rent agreement, which related to a part of the same building with another tenant where the rent for the years 2005 – 2008 was Rs.40/- per Sq.ft. After reliance on the above evidence available, a rent of Rs.5/- less than the agreed rent in Ext.A15 was fixed by the Rent Controller. It cannot under these circumstances be held that such fixation is illegal, irregular, or improper. It is not correct for this Court to interfere in the exercise of its revisional jurisdiction under Section 20 of the Act unless the procedure followed by the Court is grossly disproportionate to the possible fair rent of the building. R.C.R. No.183/20 ## **-:10:-** 12. The contention regarding a uniform rent fixed for the entire area spread over seven floors though sounds impressive at first blush, on a deeper understanding of the facts of the case, it can be seen that the same is not a reason to interfere in this revisional jurisdiction. Merely because the area occupied by the tenant falls on different floors, does not mean that the court while fixing the fair rent, must of necessity fix separate rent for each floor. It depends upon the circumstances of each case. While appreciating this contention, we cannot ignore the fact that at the time of the original agreement, the rent was admittedly a uniform rent fixed for all the floors at Rs.4.20 per Sq.ft. per month. No separate rent was fixed, depending upon the floors of the building. The rent agreed to, was a consolidated figure for the entire building. It is not necessary that dehors the facts of each case, where a building is situated on different floors, fair rent must be fixed at different rates. 13. The pleadings of the case also show that at the time of fixing the original rent, the tenants did not have a case of separate rent for separate floors. The availability of lifts or escalators, type of use of the building, the possibility of reduced noise interference in the higher floors, etc., are all matters that can weigh in even fixing higher rent for upper floors, in certain R.C.R. No.183/20 ## **-:11:-** cases. Thus, it cannot be held that in all cases, upper floors will fetch only a lesser rate of rent. Further, to obtain one building having an area of more than 33000 Sq.ft. in the particular location is also a factor that can determine the fair rent payable by the tenant. The Rent Controller has noticed that the building is situated in the center of the city with space available not only for conducting the routine works of a bank but also to act as a hub for coordinating other branches and to function as an institution to impart training. The 5[th] floor is noted as housing the staff training college of the Bank while the 7[th] floor houses an institute of information technology of the tenant, computer lab classrooms, and others. To be able to bring all these different wings of the tenant Bank under one roof, is an opportunity and advantage for the Bank. All these have gone into while fixing a single rate for all floors at the time of original letting. Adopting that same methodology while fixing fair rent in the instant case, it cannot be held the impugned orders are irregular or improper. The Appellate Authority has considered this contention of the tenant but relying upon Clause 8 in Ext.A4 agreement providing for a uniform rent at the time of letting in 1994, had repelled the said contention. We do not find any reason to interfere with the said finding of fact. The decision in R.C.R. No.311 of 2016, relied R.C.R. No.183/20 ## **-:12:-** upon by the revision petitioner is factually different and distinguishable. In such circumstances, we are of the view that the fixation of a single rate of rent for all the floors put together is not, in the circumstances of the case, illegal or improper. 14. The vehement argument of the learned Senior Counsel that the security deposit of Rs.1.57 Crores paid at the time of initial lease was indicative that the rent cannot be enhanced during the currency of the lease, was not acceptable to both the courts below. Clause 3 in Ext.A4 agreement, as extracted in the impugned judgment, shows that though the lessee has paid to the lessor a sum of Rs.1,57,64,850/- as security deposit, the same carries an interest at 10%, payable after the 15[th] of December every year. Nowhere in the agreement, nor does any document indicate that the security deposit paid by the tenant restricts/prohibits the right of the landlord to seek fixation of fair rent. Even otherwise this court had in the earlier round of litigation, as per judgment in R.C.R. No.154 of 2014 dated 3.4.2017 held that the landlord is entitled to seek fixation of fair rent. Thus, the argument raised in that regard has no basis and is rejected. 15. As regards the biennial increase of 10%, it was submitted that the recent trend has been a decrease in rent R.C.R. No.183/20 ## **-:13:-** every year rather than an increase, and hence, the biennial increase ought not to have been fixed. Ext.A11, Ext.A15, and Ext.A16 show that rent which was Rs.40/- per Sq.ft. during the period of 2005-2008 has been, by agreement, increased to Rs.65 per Sq.ft. in 2011, Rs.85 per Sq.ft. in 2017, Rs.90 per Sq.ft. in 2018 and Rs.95.60 per Sq.ft in 2019. Those exhibits relate to the very same building itself. The petition for fixation of fair rent was filed in 2009 and we are at present in 2020. The long period of time spent on adjudication of the application is also taken care of by granting the biennial increase. Even otherwise by virtue of the biennial increase ordered by the court, the increase that accrues every two years is only minimal. This Court has in **Sreekumaran Nair v. Ponnuswami Chettiyar** (2010 (3) KLT 444) held that an increase in rent ordered by the court periodically while fixing fair rent is not contrary to law. Similarly, in **Kadar Pillai v. Govan Travels** (2014 (4) KLT 593) it was held that there is nothing wrong in fixing an increase in the fair rent fixed and the same can be fixed depending on various factors like decline in the value of money, increase in the value of land, inflationary trends in the economy and regular growth of the city as a whole. Applying the aforesaid principles, it can be seen that there are no factors that warrant the reduction of rent, as has R.C.R. No.183/20 ## **-:14:-** been shown to exist. On the other hand, the evidence is in abundance regarding locational importance and the growth of Thiruvananthapuram as a city. Coupled with the above factors, the increase in the rent agreed in Ext.A11 Ext.A15 and Ext.A16 will also indicate that the rent in that part of locality has never decreased and on the contrary, has only been increasing on a year to year basis. In such a view of the matter also, fixation of biennial increase in rent by the Rent Controller, considering the location of the building and the surrounding facts, do not warrant any interference under Section 20 of the Rent Control Act. 16. In view of the above clear findings of fact by the Rent Controller as well as the Appellate Authority, we find that there is no reason to interfere with the quantum of fair rent fixed by the impugned judgments. We find that the fair rent fixed by the Rent Controller is reasonable, fair, and in accordance with law. The revision petition fails and is hence dismissed. **Sd/S.V.BHATTI JUDGE** ## **Sd/-** ## **BECHU KURIAN THOMAS JUDGE** vps /True Copy/ PS to Judge