## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT:**
## **THE HONOURABLE MR.JUSTICE K.HARILAL & THE HONOURABLE MR. JUSTICE A.M.BABU**
**MONDAY, THE 18TH DAY OF SEPTEMBER 2017/27TH BHADRA, 1939**
## **RCRev..No. 341 of 2016 (D)**
## **--------------------------**
**RCA 118/2010 of RENT CONTROL APPELLATE AUTHORITY/DISTRICT COURT,THALASSERY RCP 233/2008 of RENT CONTROL COURT/PRL.MUNSIFF COURT,KANNUR**
**REVISION PETITIONER(S)/CROSS APPELLANTS/PETITIONERS: -------------------------------------------**
## **1. C.H. VIKAS**
**S/O. C.H.CHANDRABHANU, AGED 49 YEARS.**
**2. C.H. VIJIL**
**S/O. C.H.CHANDRABHANU, AGED 46 YEARS**
**3. C.H. VINOD**
- **S/O. C.H.CHANDRABHANU, AGED 44 YEARS ALL ARE RESIDING AT ANANDA VILAS, SOUTH BAZAR, KANNUR-2.**
**BY ADVS.SRI.G.SREEKUMAR (CHELUR) SRI.K.ASHIS**
## **RESPONDENT(S)/RESPONDENTS/RESPONDENTS:**
**-------------------------------------**
**1. A.KARTHIYAYANI W/O.LATE KALLEN BALAN, AGED 71 YEARS**
**2. ANITHA, D/O.LATE KALLEN BALAN, AGED 59 YEARS**
**3. SHAMEENA, D/O.LATE KALLEN BALAN, AGED 44 YEARS ALL ARE RESIDING AT KALLEN HOUSE, MALABAR DYEING COMPOUND, KANNUR-2.**
**R1-R3 BY ADV. SRI.K.RAJESH SUKUMARAN**
**THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 18-09-2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:**
**OKB**
## K.HARILAL & A.M.BABU, JJ.
--------------------------R.C.R. No.341 of 2016 --------------------------Dated this the 18[th] day of September, 2017
## O R D E R
## **Harilal, J.**
The revision petitioners are the landlords who filed an application under Section 5 of the Kerala Buildings (Lease and Rent Control) Act, 1965 (for short “the Act”) against the respondents herein who are the tenants of the building owned by the petitioners. Earlier the petitioners filed RCP No.333/1997 for eviction of the tenants under Section 11(4) (iv) of the Act for reconstruction and the said petition was allowed. Thereafter the petitioners filed the aforesaid Rent Control Petition to fix the fair rent of the building so reconstructed. At the time of filing the Rent Control Petition, the room was not given to the respondents and later they entered into a compromise in the Lok Adalath and the reconstructed room was given to the tenants on
**RCR.341/16-D :2:**
01/8/2009 and they undertook to pay Rs.500/- as prevailing rent from the month till the fixation of fair rent by the court. Thus, the existing rent is Rs.500/- per month and the area of the shop room is Rs.135/- per sq. ft.
2. According to the petitioners, the petition schedule building is situated at South Bazar which is a busy commercial building in Kannur and it is normally 300 metres away from the Kannur Municipal Bus stand and Railway station, 100 metres away from Caltex junction; South Bazar market, Ashoka Hospital, Mother and Child Hospital, State Bank of Travancore, Town Service Cooperative Bank, etc. are situated very near to the petition schedule building. In short, it is situated in a commercially important area. The value of land where the building is situated is more than Rs.10 lakhs per cent. The petition schedule building is a room in the ground floor of the three storied building complex namely “Bhanu's Tower”. The other rooms in the building complex are occupied by
**RCR.341/16-D :3:**
various tenants and the monthly rent of those rooms varies from Rs.9,500/- to Rs.10,500/-. Thus, considering the importance of the locality, the value of the land and other facilities available to the respondents in the newly constructed building, the petition schedule shop room would fetch a rent at the rate of Rs.9,500/- per month. However, the petitioners prayed for fixation of rent at the rate of Rs.7,500/- per month.
3. The respondents resisted the claim for fixation of fair rent contending that the locality is not so important as claimed by the petitioners and the prevailing rent in that area is lesser than the rent claimed by the petitioners. According to the respondents, it is not correct to say that the value of the land is Rs.10 lakhs per cent. They are doing petty business of firewood in the petition schedule shop room and the weekly business turnover is only Rs.700/-. So they are unable to pay the rent as claimed by the petitioners.
**RCR.341/16-D :4:**
4. On the aforesaid rival pleas, both parties adduced evidence, which consists of the oral testimony of PW1 and RW1 and Exts.A1 to A10, B1 and C1. After considering the aforesaid evidence the Rent Control Court fixed Rs.3,000/- as the fair rent. In the Appeal filed by the tenants and Cross Appeal filed by the landlords, the Appellate Authority interfered with the findings of the Rent Control Court and reduced the fair rent to Rs.2,025/- fixing the fair rent @ Rs.15 per Sq.Ft. Thus the appeal stands allowed and Cross Appeal stands dismissed. The legality and propriety of the methodology adopted by the Appellate Authority as well as Rent Control Court for fixation of fair rent are challenged in this revision.
5. Heard the learned counsel for the petitioners and the learned counsel appearing for the respondents.
6. Going by the impugned judgment, it could be seen that indisputably, the petition schedule building is situated in a commercially important locality of Kannur
**RCR.341/16-D :5:**
Town. The municipal bus stand, railway station and south bazar market etc are very near to the petition schedule building. In order to prove the prevailing rent of that area, the petitioner has pressed Exts.A3, A9 and A10 into service and relied on the guidelines issued by the Apex Court in **Edger Ferus v. Abraham Ittycheria [2004 (1) KLT 767]** . Ext.A3 is the lease deed in respect of the room having an area of 100 Sq.Ft. and the monthly rent is Rs.9500/- which would come to Rs.95 per sq.ft. It is not disputed that the said room is very near to the petition schedule shop room. Ext.A9 is the lease deed executed in respect of the room having an extent of 980 Sq.ft and the monthly rent of the said room is Rs.22500/- which would come to Rs.23.7 per Sq.Ft. It is not disputed that the said shop room is also situated very near to the petition schedule building. Ext.A10 is the lease deed executed in respect of another room which is situated very near to the petition schedule building and the monthly rent of that
**RCR.341/16-D :6:**
shop room is Rs.4250/- and the aforesaid rooms are situated in the very same building complex. The room covered under Ext.A3 is in the ground floor and the room covered under Ext.A9 is in the first floor of the very same building. The Appellate Authority fixed fair rent @ Rs.15 per Sq.Ft. only and the same is far below the rates of prevailing rent, which would stand proved by Exts.A3, A9 and A10. Similarly, the Rent Control Court has not considered the guideline laid down by the Supreme Court in **Edger Ferus** 's case. Therefore, the Rent Control Court cannot be justified in this respect.
7. As rightly pointed out by the learned counsel for the respondents, the room covered under Ext.A3 is an ATM counter of the bank and it appears that the said rent is a fancy rent. More over, the petitioners have not claimed fair rent on a par with the rent shown in Ext.A3. Therefore, we discard Ext.A3 in the process of determination. But, Exts.A9 and A10 would show actual prevailing rent in the
**RCR.341/16-D :7:**
locality. It is the case of the 1[st] respondent that she is doing a petty firewood business in the petition schedule building and her weekly business turnover is Rs.700/-. We are of the opinion that in the determination of fair rent, the profit which is being derived by the tenant from the business in the petition schedule building has no significance or relevance and it cannot be accounted for the fixation of fair rent.
8. More importantly, it is to be borne in mind that in **Edger Ferus** 's case the Supreme Court has laid down guidelines for fixation of fair rent. It is specifically stated in the guideline that while fixing the fair rent the reduction in the purchasing power of money and the variation of cost of living index in the area, after the commencement of the lease, caused by inflation and the availability of the building in that locality etc. are to be taken into consideration. So also, the cost of construction of the building including the cost of labour and the building
**RCR.341/16-D :8:**
materials, actual value of the building inclusive of the value of land under the actual type of construction, amenities, general or special provided to the building etc. also assume relevance and significance.
9. Even though the appellate court has referred to the aforesaid decision also, we find that the Appellate Authority has not applied the parameters laid down in the aforesaid decision in its correct perspective. The petition schedule room forms part of a newly constructed building having all facilities and this fact also requires consideration in the fixation of fair rent, though omitted by the courts below. Therefore, we find that the rent fixed by neither the Rent Control Court nor the Appellate Authority can be justified, at any view point.
10. Having regard to Exts.A9 and A10, as prevailing rates of rent in the same building and construction cost of a new building complex, we are of the opinion that the rent @ Rs.30 per sq.ft. can be fixed as fair rent and the monthly
**RCR.341/16-D :9:**
rent would come to Rs.4,050/- per month. Therefore, the rent fixed by the Appellate Authority and the Rent Control Court will stand set aside and the respondents shall pay rent @ Rs.4,050/- per month to the petitioners from the date of occupation of the respondents in the reconstructed building.
This Rent Control Revision will stand allowed accordingly. All pending Interlocutory Applications will stand closed.
## **Sd/-**
K.HARILAL, Judge. Sd/A.M.BABU, Judge.
okb.
