MANGALODAYAM PVT. LTD. v. JOHNY A.L. and JOSHY JOHN

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.HARILAL & THE HONOURABLE MRS. JUSTICE ANNIE JOHN WEDNESDAY,THE 29TH DAY OF AUGUST 2018 / 7TH BHADRA, 1940 RCRev..No. 87 of 2018 RCA 126/2011 of 3RD RENT CONTROL APPELLATE AUTHORITY, THRISSUR RCP 24/2005 of THE RENT CONTROL COURT,THRISSUR ## REVISION PETITIONERS/APPELLANTS/RESPONDENTS: - 1 JOHNY.A.L., AGED 82, S/O.LONAPPAN, ARANGASSERY HOUSE, CHIYYARAM VILLAGE, THRISSUR TALUK. - 2 JOSHY JOHN, AGED 50, S/O.JOHNY A.L., ARANGASSERRY HOUSE, CHIYYARAM VILLAGE, THRISSUR TALUK. BY ADV. SRI.ANOOP.V.NAIR ## RESPONDENT/RESPONDENT/PETITIONER: M/S. MANGALODAYAM PVT. LTD., ROUND SOUTH, THRISSUR - 680 001, REP. BY ITS MANAGING DIERCTOR A C CHUMMAR, S/O.CHAKKU, AKKARA HOUSE,THRISSUR 680 001. BY ADVS.SMT..MEENA.A (CAVEATOR) SMT..MEENA.A CAVEATOR THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 29.08.2018, ALONG WITH R.C.Rev. Nos. 88, 91 & 92 of 2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 2 :-** ## **O R D E R** ## **K. Harilal, J.** Since all these revision petitions arose out of a common judgment passed by the Appellate Authority, these rent control revision petitions are also heard together and disposed of by this common order. 2. These revision petitions are filed by the tenants against whom the respondent/landlord filed R.C.P. Nos.24 of 2005 and 25 of 2005 before the Rent Control Court, Thrissur under Section 5 of the Kerala Buildings(Lease and Rent Control) Act, 1965 _(hereinafter referred to as 'the Act'),_ seeking an order fixing the fair rent of the respective shop rooms. 3. The respondent opposed the said ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 3 :-** application and after considering the evidence adduced by both parties, Rent Control Court fixed fair rent at the rate of `16/- per sq.ft. with 30% increase in the monthly rent for every five years. 4. Feeling aggrieved, both the landlord and the tenants filed Rent Control Appeals before the Rent Control Appellate Authority, Thrissur and after re-appreciating the evidence on record, the Rent Control Appellate Authority enhanced the fair rent from `16/- to `50/- per sq.ft.; but reduced the rate of periodical increase from 30% to 15% for every five years. These revision petitions have been filed by the tenants, assailing the enhancement of fair rent made by the Appellate Authority. The parties are referred to as in the Rent Control Petitions. 5. According to the petitioner/landlord the petition schedule shop rooms forms a part of a ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 4 :-** building by name 'Mangalodhayam Building' and the respondents are occupying the tenanted premises in the ground floor of the said building. The said building is situated by the side of a road by name 'Swaraj Round'. The building is facing the said main road and Thrissur city is developed around 'Swaraj Round'. In short, according to the petitioner, the building is situated in the heart of the city. It is very near to church, temple, hospital, theatre, banks, office, wholesale jewelleries and textile shops, KSRTC bus stand, railway station etc. The shop room in R.C.P. No.24 of 2005, having an extent of 550 sq.ft. was let out in the year 1990 for a monthly rent of `1,000/- and shop room in R.C.P. No.25 of 2005 having an extent of 1050 sq.ft. was let out in the year 1980 for a monthly rent of `414/- and subsequently the rent was enhanced to `680/-. Thus, `680/- is the present ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 5 :-** rent of the said building. The present monthly rent of the aforesaid shop rooms is too low, when considering the importance of the locality and the development occurred after the commencement of the tenancy. That apart, according to the petitioner, the rate of rent of the petition schedule shop rooms are very low, when comparing with the rent of the similar buildings situated very near to the petition schedule building. More importantly, the present rent is disproportionate with the resultant reduction in the purchasing power of money, variation in the cost of living index in the area, caused by the inflation since the commencement of lease and demand for accommodation and availability of buildings in the locality. 6. In R.C.P. No.24 of 2005, the petitioner prayed that the fair rent is to be fixed at `35,000/- per month from 01.11.2004 and R.C.P. No.25 ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 6 :-** of 2005, the petitioner prayed for fixing the rent at the rate of `1,000/- per month from 01.11.2004. 7. The respondents filed objection, contending that the claim for enhancement of fair rent is unreasonable and liable to be rejected. According to the respondents in R.C.P. No.24 of 2005, the carpet area is only 450 sq.ft. and the place where the building situated is not so important, as claimed by the petitioner. Further, it is contended that the building is an old one and having no amenities as that of other buildings situated adjacent to the petition schedule building in that locality. The enhancement of rent is claimed with a _mala fide_ intention to evict the respondents from the petition schedule building. The present rate of rent is same that of the similar buildings in that locality. There is no parking area for the said building by name 'Mangalodhayam ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 7 :-** Building' and there is no convenient way for the customers to reach the building. So, minimal business is conducted in the petition schedule shop room. Due to the lack of parking facility around Swaraj Round, the volume of business in the city has been diminished around Swaraj Round. Therefore, the claim for enhancement of the rent is unfounded and liable to be rejected. 8. On the aforesaid pleadings, both parties, in all rent control petitions adduced evidence and after re-appreciating the evidence on record, the Appellate Authority enhanced fair rent to `50/- per sq.ft. from `16/- per sq.ft. But, reduced the periodical annual increase in the rate of rent from 30% to 15%, for every five years. The legality and correctness of the methodology adopted by the Appellate Authority in fixing the enhanced fair rent is challenged in this rent control revision ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 8 :-** petitions. 9. Heard the learned counsel for the revision petitioners and the learned counsel for the respondent. 10. Indisputably, the determination of fair rent is a factual enquiry which would depend upon the evidence adduced by the landlord and the tenant. Therefore, the scope and extent of interference in revision filed under Section 20 of the Act is very limited and confined to the legality and propriety of the methodology adopted by the courts below in the determination of fair rent only. This Court is not inclined to re-appreciate the entire evidence on record, unless the findings of the courts below are found perverse. Bearing the aforesaid limitation under Section 20 of the Act, we have scrutinised the legality and propriety of the findings of the courts below. ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 9 :-** 11. According to the petitioner, the building is situated in the heart of Thrissur city. It has come out in evidence that Thrissur city has been developed around a famous temple and the temple is encircled by a road by name 'Swaraj Round'. It is not disputed that the petition schedule buildings are facing to Swaraj Round and it is situated in a commercially important area. Going by the judgment passed by the Appellate Authority, it could be seen that the locational importance of the locality is not seriously disputed by the tenants also. Therefore, the courts below are justified in finding that the petition schedule buildings are situated in the heart of the Thrissur city. The date of commencement of tenancy and prevailing rate of rent with respect to all the buildings are not disputed. The dispute centres around the area of the tenanted premises and the claim for enhancement only. ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 10 :-** Therefore, it can be safely concluded that the rent requires enhancement. 12. The prime question to be considered is whether there is any illegality or impropriety in the methodology adopted by the appellate authority whereby the fair rent fixed by the Rent Control Court stands enhanced to Rs.50 from Rs.16. In other words, the question is whether the fair rent has been fixed in accordance with the prevailing rent of the similar building in the same locality and the variation in economy caused by inflation. Going by the impugned judgment passed by the Appellate Authority, it could be seen that in order to prove the prevailing rent of the similar buildings in the locality, the petitioner/landlord has adduced oral evidence by examining PWs 1 to 3 and produced Exts.X1, X2 and X5. It is not disputed that the building is an old building having no car parking ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 11 :-** area and there is only a pavement in front of the shop through which people walk. Ext.C1 Commission Report shows that the building was constructed long years back. 13. PW1 is the Assistant Manager of Paramekkavu Devaswom and he was examined to prove Ext.X1 copy of rent deed executed between Paramekkavu Devaswom and a tenant by name Aashim on 21.01.2008 with regard to a building occupied by the said tenant and owned by the Paramekkav Devaswom. As per the said agreement, the shop room having an area of 106 sq.ft. has been given on rent at the rate of Rs.188 per sq.ft. with periodical increase of 15%. It has come out in evidence that the Mangalodhayam building and Pathayapura building with respect to which Ext.X1 is produced are situated at a distance of 100 metres only. It is true that Ext.X1 shows that the agreement was executed on ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 12 :-** 21.01.2008. But in the instant case, the enquiry was to fix the rent prevailing in the year 2005. That apart, the building mentioned in Ext.X1 is a new building constructed in the year 2005. Whereas the petition schedule building was constructed, admittedly, 50 years back. It is needless to say that the rate of rent of the aforesaid Pathayappura building cannot be applied as such to the petition schedule building. In short, Ext.X1 is not comparable with the petition schedule building. But Ext.X1 reveals the prevailing rent in the year 2008 with respect to a new building in the locality. 14. PW2 is the Manager of Darmodhayam Company. He is in possession of another building which is situated very near to the petition schedule building. He was examined to prove Ext.X2 rent deed executed between Darmodhayam Company and the tenant, who occupied the shop room in the building owned by ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 13 :-** the Darmodhayam Company. That building is also a concrete building with car parking facility. Ext.X2 shows that the building was rented out for a monthly rent of Rs.75 per sq.ft. Ext.X2 is the rent deed executed in June, 2009. The proximity between the petition schedule building and the building mentioned in Ext.X2 is not disputed. After analysing the comparability of the petition schedule building with the building mentioned in Ext.X2, the appellate authority has observed that the only difference is that the building mentioned in Ext.X2 is comparatively new and has car parking facility. So, the appellate authority has not taken Ext.X2 as such as a basic document to determine the rent prevailing in the locality in the year 2005. It is also held that the building mentioned in Ext.X2 is not exactly similar as that of the petition schedule building. ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 14 :-** 15. Thus, on an analysis of oral testimony of PWs 1 and 2 coupled with Exts.X1 and X2, the cumulative inference that can be drawn is that the prevailing rent during the year 2008 with respect to the newly constructed building in the same locality is 188 per sq. ft and that of the building constructed much earlier is Rs.75 per sq. ft. In order to substantiate the contention that the prevailing rent of the similarly situated building in the locality is very less than that was claimed by the petitioner/landlord. 16. The respondents have examined RW3 and have produced Ext.X5. RW3 is the Assistant Manager of a textile shop by name 'Kalyan Fabrics'. He was examined to prove Ext.X5 series of receipts. The building mentioned in Ext.X5 is also situated very near to the petition schedule building. The rate of rent of the building mentioned in Ext.X5 is Rs.3 per ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 15 :-** sq. ft. Ext.X5 is the series of rent receipts with respect to the building occupied by Kalyan Fabrics. The rent deed with respect to the said building has not been produced in evidence. In the rent receipt, the extent or the area of the shop room is not mentioned. It has come out in evidence in the cross examination of RW3 that the building is one to be demolished for the development of the city, and that for the last 100 years, Kalyan Silks is functioning in that building. Thus, the said building is a very old building, where Kalyan Silks is functioning for so many years. In the absence of the extent or the area of the building, the exact rate of rent cannot be calculated. Moreover, it has come out in evidence that the said building is situated in a bell-mouth and the Corporation has decided to demolish the same for the expansion of the road. In the absence of a rent deed, no reliance can be ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 16 :-** placed on the rent receipt produced or the oral evidence of RW3. Moreover, it has come out in evidence that the said building mentioned in Ext.X5 can never be compared with the building mentioned in Ext.X1, X2 or the petition schedule building. In short, the evidence brought out by the examination of RW3 and the production of Ext.X5 is unworthy and unreliable. Therefore, we also find that the court below is justified in discarding Ext.X5 and the oral testimony of RW3. 17. The respondent has produced Ext.B1 rent deed, which is the rent deed with respect to the first floor of the same building to which the petition schedule building also forms a part. It is stated in Ext.B1 rent deed that the total extent of the room is 1665 sq. ft and the total rent is Rs.1,08,225. In other words, the rent with respect to the first floor of the very same building is ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 17 :-** Rs.65 per sq. ft. Ext.B1 is also executed in October, 2008. We are of the view that Ext.B1 is the most relevant document, which would show the prevailing rent of a similarly situated another room, in the first floor of the very same building. Therefore, the tenanted room shown in Ext.B1 is well comparable with the petition schedule building. But the only difference is that Ext.B1 is with respect to the first floor of the building; whereas the petition schedule building is situated in the ground floor of the very same building. It is needless to say that the rent for the ground floor is always higher than the rent of the first floor. Therefore, the rent shown in Ext.B1 also cannot be taken as such while determining the fair rent of the petition schedule building. No doubt, Ext.B1 can be taken for striking a balance to determine the fair rent of the petition schedule building, in the process of ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 18 :-** determination. The Rent Control Court has fixed the fair rent at the rate of Rs.16 per sq. ft for the year 2005. But the appellate authority has enhanced the same to Rs.50 per sq. ft. Similarly, the Rent Control Court has increased the rent at the rate of 30% for every three years. But the appellate authority has reduced the said annual increase from 30% to 15%. We find that Ext.B1 can be taken as a basic document for the determination of fair rent with respect to the petition schedule building. Ext.B1 is produced by the tenant himself. Since the annual increase was fixed for five years only, it could be seen that the prevailing rent from 2005 to 2010 is Rs.50 per sq. ft. only. It is needless to say that when the rent of the first floor of the same building is Rs.65 per sq. ft, the rent of the petition schedule shop room, which is situated in the ground floor of the same building is only ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 19 :-** Rs.50. As we have held above, the rent of the shop room in the ground floor is always more than that of the first floor, particularly when the ground floor is in occupation of the retail shops. But in the instant case, we find that the rent of the petition schedule building which situated in the ground floor is lesser than the rent of the rooms in the first floor, during the year 2008. In the above view, we do not find any reason to interfere with the findings of the courts below. The courts below have rightly relied on Ext.B1 as a basic document for the determination of the fair rent. More importantly, Ext.B1 is a document produced by the tenant himself. In other words, the document produced by the tenants is taken as a basic document for the determination of the fair rent. Therefore, the respondents/tenants are not justified in contending that the rent fixed by the court below is unreasonable or exorbitant. ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 20 :-** We find that there is no irregularity or illegality in the methodology adopted by the appellate authority in the determination of fair rent and the appellate authority is justified in enhancing the fair rent from Rs.16 per sq. ft to 50 per sq. ft. 18. The learned counsel for the respondents vehemently contended that the court below went wrong by fixing the fair rent and making them applicable from the date of Rent Control Petition. Going by the relief sought for in the Rent Control Petition, it could be seen that the petitioner/landlord has sought for fixation of fair rent in RCP No. 24 of 2005 from 01.11.2004 and in RCP No. 25 of 2005 from 01.01.2005. It further goes to show that the enhanced rent was made applicable from the date of Rent Control Petition not as a concession and it was made on the basis of the relief sought for in the petition. ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 21 :-** 19. The learned counsel for the petitioner/landlord cited the decision reported in _**Kader Pillai v. Goven Travels**_ (2014(4) KLT 593). We have meticulously gone through the proposition laid down in the said decision, wherein the Court observed that if the conditions exist as on the date of application for the fixation of the fair rent, necessarily the Court has to fix the fair rent as on the date of application. In the instant case, the enquiry was made to determine the fair rent in the year 2005. The appellate authority is justified in fixing the enhanced fair rent with effect from 2005. It is not a case wherein the enhanced rent, determined for the year 2008, was made applicable to 2005. 20. It is also contended that the periodical enhancement cannot be granted in a Rent Control Petition. But, we are unable to agree the said ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 22 :-** submission in view of the decision laid down by the Supreme Court in _**Mohammad Ahmad v. Atma Ram Chauhan**_ [2011(2) KLT SN 98 (C.No. 120) SC]. Going by the aforesaid decision, it could be seen that the Apex Court has introduced guidelines for a periodical enhancement. Therefore, in view of the aforesaid decision of the Apex Court, it cannot be held that the periodical enhancement is illegal or unsustainable. In the above analysis, we do not find any reason to interfere with the determination of fair rent made by the Appellate Authority, whereby the rent fixed by the Rent Control Court stands enhanced from Rs.16 to Rs.50 per sq. ft. Accordingly, these Rent Control Revision Petitions fail and are dismissed. However, the learned counsel for the revision petitioners have sought for some time to pay the arrears of rent. Considering the quantum of amount ## **R.C.R.Nos.87, 88, 91 & 92 of 2018** ## **-: 23 :-** to be paid as arrears of rent, the revision petitioners are given three months' time from today to pay the arrears of rent. Sd/- **K. HARILAL,JUDGE.** **GE K. HARILAL,JUDGE. sd/ANNIE JOHN,JUDGE.** _Rv/_ DST //True copy//