K.S. Kadar Pillai v. M/S Goven Travels (R.C.R. Nos. 420/2012, 421/2012, 422/2012 and 118/2013)

## **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 2014/1ST KARTHIKA, 1936** **RCRev..No. 420 of 2012 ()** **-------------------------RCA 84/2011 OF RENT CONTROL APPELLATE AUTHORITY (I ADDL.DISTRICT COURT), ERNAKULAM DATED 24-09-2012 RCP 66/2009 OF III ADDL. MUNSIFF & RENT CONTROL COURT, ERNAKULAM DATED 18-06-2011** **-----------------------** **REVISION PETITIONER/RESPONDENT/PETITIONER :** **----------------------------------------------------------------------------** **K.S.KADAR PILLAI, AGED 62. S/O.K.A.SAIDALI, RUKIYA BAGH, ROYAL LANE KADAVANTHRA P.O, KOCHI 20, NOW RESIDING AT G 27 PANAMPILLY NAGAR, KOCHI - 682 036.** **BY ADVS.SRI.VAKKOM N.VIJAYAN SMT. V. RENJU SRI.P.ANIYAN SMT.M.A.RAMITHA** **RESPONDENT / APPELLANT/RESPONDENT :** **------------------------------------------------------------------** **M/S. GOVEN TRAVELS REP. BY ITS MANAGER SOUTH INDIA, SRI. LANCY GEORGE AGED 56, 31/1078 A, HOSPITAL ROAD, ERNAKULAM KOCHI 11.** **BY SENIOR ADVOCATE SMT. SUMATHI DANDAPANI BY ADV. SRI.MILLU DANDAPANI** **THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 10-06-2014, ALONG WITH RCR. NO. 421/2012 & CONNECTED CASES, THE COURT ON 23/10/2014 PASSED THE FOLLOWING:** **Mn** ## **K.T.SANKARAN** ## **& A.MUHAMED MUSTAQUE, JJ.** ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **Dated this the 23[rd] day of October, 2014** **==> picture [258 x 18] intentionally omitted <==** ## **Muhamed Mustaque, J.** 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 ``` R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013 ``` ## **-:2:-** 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 ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** ## **-:3:-** 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 ``` R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013 ``` ## **-:4:-** 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, ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** ## **-:5:-** 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. ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** ## **-:6:-** 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 ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** ## **-:7:-** 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 ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** ## **-:8:-** 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** ``` R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013 ``` ## **-:9:-** **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.” ## **`R.C.R.Nos. 420/2012, 421/2012, 422/2012 and 118/2013`** **-:10:-** 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** ms