Sunny T.A. and Thampan T.A. v. Boby Mani (RCRev. Nos. 250 of 2016 and 251 of 2016)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.HARILAL** **&** **THE HONOURABLE MRS. JUSTICE ANNIE JOHN** **THURSDAY, THE 11TH DAY OF OCTOBER 2018 / 19TH ASWINA, 1940** **RCRev..No. 250 of 2016** **AGAINST THE ORDER IN RCP 34/2011 OF THE RENT CONTROL COURT, KOTTAYAM DATED 20-03-2014** **AGAINST THE JUDGMENT IN RCA 24/2014 OF THE RENT CONTROL APPELLATE AUTHORITY-IV, KOTTAYAM DATED 31-03-2016** ## **REVISION PETITIONERS:** **1 SUNNY T.A., AGED 59 YEARS, SON OF ABRAHAM. T.C., KUMARAKOM HOTEL, KMC-856/IX, THANNICKAL BUILDINGS THIRUNAKKARA, KOTTAYAM, RESIDING AT THYPARAMBIL HOUSE, PARK LANE, KOTTAYAM VILLAGE, KOTTAYAM DISTRICT.** **2 THAMPAN. T.A., AGED 62 YEARS, SON OF ABRAHAM T.C. KUMARAKOM HOTEL, KMC-856/IX, THANNICKAL BUILDINGS, THIRUNAKKARA, KOTTAYAM, RESIDING AT THYPARAMBIL HOUSE, PARK LANE, KOTTAYAM VILLAGE, KOTTAYAM DISTRICT.** **BY ADVS. SRI.T.KRISHNANUNNI (SR.) SRI.R.RAJESH KORMATH** ## **RESPONDENT:** **BOBY MANI, AGED 55 YEARS, SON OF LATE M.O. MANI, RESIDING AT THANNICKAL HOUSE, NATTAKOM VILLAGE, PAKKLI P.O., KOTTAYAM TALUK, KOTTAYAM DISTRICT PIN- 686 013.** **BY ADVS. SRI.C.S..MANILAL (CAVEATOR) SRI.KARJET KODUVATH SRI.S.NIDHEESH** **THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 11.10.2018, ALONG WITH RCRev.251/2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** Rcr250&251/2016 2 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.HARILAL** **&** **THE HONOURABLE MRS. JUSTICE ANNIE JOHN** **THURSDAY ,THE 11TH DAY OF OCTOBER 2018 / 19TH ASWINA, 1940** ## **RCRev..No. 251 of 2016** **AGAINST THE ORDER/JUDGMENT IN RCP 34/2011 of ADDL.M.C.,KOTTAYAM** **AGAINST THE ORDER/JUDGMENT IN RCA 25/2014 of ADDL. D.C. & SESSIONS COURT - IV, KOTTAYAM DATED 31-03-2016** ## **REVISION PETITIONER/S:** **1 SUNNY.T.A, AGED 59 YEARS, S/O. ABRAHAM T.C., KUMARAKOM HOTEL, KMC-856/IX, THANNICKAL BUILDINGS, THIRUNAKKARA, KOTTAYAM, RESIDING AT THYPARAMBIL HOUSE,PARK LANE, KOTTAYAM VILLAGE, KOTTAYAM DISTRICT.** **2 THAMPAN T.A.,AGED 62 YEARS, S/O. ABRAHAM T.C., KUMARAKOM HOTEL, KMC-856/IX, THANNICKAL BUILDINGS, THIRUNAKKARA, KOTTAYAM, RESIDING AT THYPARAMBIL HOUSE,PARK LANE, KOTTAYAM VILLAGE, KOTTAYAM DST.** **BY ADVS. SRI.T.KRISHNANUNNI (SR.) SRI.R.RAJESH KORMATH** ## **RESPONDENT/S:** **BOBY MANI, AGED 55 YEARS, S/O. LATE M.O.MANI, RESIDING AT THANNICKAL HOUSE, NATTAKOM VILLAGE, PAKKIL P.O., KOTTAYAM TALUK, KOTTAYAM DISTRICT 686 013** **BY ADVS. SRI.C.S..MANILAL (CAVEATOR)** **THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 11.10.2018, ALONG WITH RCRev..250/2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** Rcr250&251/2016 3 ## **COMMON ORDER** ## **K.Harilal, J.** Since, these revision petitions are directed against the common judgment passed in RCA No.24/2014 filed by the tenant and RCA No.25/2014 filed by the landlord, against the order passed in RCP No.34/2011 of the Rent Control Court, Kottayam, these revision petitioners are heard together and disposed of accordingly. The revision petitioners are the tenants in RCP 34/2011 on the file of the Rent Control Court, Kottayam. The respondent/ landlord filed the aforesaid rent control petition, under Section 5 of the Kerala Buildings (Lease and Rent Control) Act, 1965 (for short, the Act) seeking an order, fixing the fair rent of the building, which is in occupation of the tenants. The tenants are Rcr250&251/2016 4 conducting a hotel in the tenanted premises from 1947 onwards. That apart, now they have been conducting photostat, telephone booth, DTP and internet cafe also in the said tenanted premises. According to the petitioner, the respondents have been paying rent fixed in the year 1947 and now the rent is Rs.125/- for an extent of 1800 sq.ft. After the commencement of tenancy, the rent had never been enhanced. The prevailing rent of the similarly situated buildings in the same locality is Rs.50 to 60 per sq.ft. Thus, the present rent of the petition schedule building is only a meagre amount, when comparing with the prevailing rent in the locality. 2. The petition schedule building is situated in a commercially important locality in Kottayam town very near to Gandhi squre, Rcr250&251/2016 5 Kottayam municipal office, private bus stand and famous jewellery and textile shops etc. No enhancement has ever been made, taking into account the currency depreciation caused by inflation, since 1947. Hence, the landlord filed the aforesaid rent control petition, under section 5 of the Act, seeking an order for fixation of fair rent of the petition schedule building. The landlord prayed for fixing the fair rent at the rate of Rs.60 per sq.ft., for an extent of 1800 sq.ft. 3. The tenants resisted the claim for enhancement of the present rent contending that the petition schedule building is not situated in a potential area, as contended by the landlord. According to the tenants, the rent prevailing in the locality for new buildings with all amenities is only Rs.10 per sq.ft. and the petition schedule building Rcr250&251/2016 6 cannot be considered anywhere near to it. The rent of the petition schedule building is not a meagre amount, as averred by the landlord. Even though the petition schedule building is situated near to the old private bus stand, the private bus stand has been shifted to another place and thereby the importance of the locality where the building is situated has been reduced considerably. The petition schedule building is a very old building, which was constructed more than 80 years back. The petition schedule building lacks parking space and amenities for conducting the hotel business and the tenants spent huge amount for repair works and amenities of the petition schedule building. No maintenance has ever been done by the landlord to the petition schedule building. With the aforesaid averments, the tenants prayed for dismissal of Rcr250&251/2016 7 the rent control petition. 4. On the aforesaid rival pleadings, both parties adduced evidence, which consists of the oral evidence of Pws.1 to 5 and documentary evidence, Exts.A1 to A17 on the part of the landlord and the oral testimony of CPWs 1 to 3 and Exts.B1 to B4 from the part of the tenants. Exts.X1 to X3 were marked as third party exhibits. On appraisal of the aforesaid evidence on record, the Rent Control Court fixed the fair rent at the rate of Rs.10 per sq.ft. 5. Feeling aggrieved, both the tenants and the landlord preferred appeals as RCA Nos.24 and 25/2014. After re-appreciating the evidence on record, the Appellate Authority refixed the fair rent, by enhancing the rate of rent to Rs.30 per sq.ft. from Rs.10. These rent control revisions are filed, challenging Rcr250&251/2016 8 the judgment, dismissing the appeal filed by the tenants and allowing the appeal filed by the landlord. 6. Heard the learned counsel for the revision petitioners/tenants and the learned counsel for the respondent/landlord. 7. Sri.T.Krishnanunni, learned Senior counsel for the tenants advanced arguments canvassing the point that the Appellate Authority went wrong by relying on licence deeds, Exts.A3 and A5 to A7 for fixation of fair rent of the petition schedule building, which was leased out to the tenants for monthly rent. Further, it is contended that both the courts below have erred in discarding Ext.X3 and Exts.B1 to B4 for fixing the fair rent. So also the Appellate Authority has lost sight of the evidence given by CPW3. According to the learned counsel for the Rcr250&251/2016 9 tenants, Exts.B1 to B4 and Ext.X3 series would show the actual prevailing rent of the similarly situated building in the locality. Therefore, the Appellate Authority ought to have fixed the fair rent of the petition schedule building, in parity with the rate of rent evidenced by Ext.X3 series and Ext.B4. It is also contended that the Appellate Authority went wrong by taking into account the prevailing rent of the new buildings for fixing the fair rent of the petition schedule building, which was constructed 60 years back. According to the learned counsel for the tenants, the most suitable building for fixation of fair rent is the building in which CPW3 was conducting a super market, by name Orion supermarket. But, the courts below have discarded the evidence of CPW3 and the same is not justifiable at any view point. Rcr250&251/2016 10 8. Indisputably, the rent was not revised periodically since 1947 in proportion to the reduction in purchase power of money and consequential increase in the cost of living, caused by inflation during the period from 1947 to 2011. Similarly, the commercial importance of the locality, where the building is situated is also not disputed. The building is situated at the heart of Kottayam town, very near to Gandhi Square, a place very near to Municipal office, private bus stand, District hospital, central junction Thirunakkara road, Kottayam Mahadeva temple and well known shops; textiles and jewellery etc. For the reasons stated above, the requirement of enhancement in existing rate of rent and the fixation of fair rent can never be disputed and the only question is whether there is any illegality or impropriety in the Rcr250&251/2016 11 determination of fair rent. 9. Going by the order passed by the Rent Control Court, it could be seen that the Rent Control Court has discarded Exts.A5 to A7 documents on a finding that those documents are licence deeds. The lower court placed reliance on Ext.A4, which would show rent @ Rs.13.7, as basic document; but fixed rent @ Rs.10 only, on the reasoning that during the course of cross-examination of PW1, the counsel for the respondent put a question suggesting Rs.10 as rate of rent prevailing in the locality, to him. Further, the court below discarded Ext.X3(a) and X3(c) and B1 produced by the respondent, on a finding that the rent @ Rs.4 and 8 respectively shown in the said documents are very meagre and unreliable, when two other buildings standing just opposite to the building shown in Ext.X3(a) and X3(c) are Rcr250&251/2016 12 fetching rent @ Rs.70 per sq.ft. So also, it has come out in evidence that the entire files relating to Ext.X3(a) and X3(c) are under the investigation of Vigilance Department on the allegation that there was unholy understanding between the Municipality and the tenants in Ext.X3(a) and X3(c) for fixing the rent at a meagre amount. 10. Coming to the impugned judgment passed by the Appellate Authority, it could be seen that the Appellate Authority reversed the findings of the Rent Control Court that Exts.A5 to A7 are licence deeds and arrived at a finding that those documents are lease deeds and not licence. The Appellate Authority placed reliance on Ext.A3 lease deed executed by PW4 in favour of the petitioner, as basic documents. Though Ext.A3 shows rent @ Rs.36.69, considering the old age of the Rcr250&251/2016 13 building reduced the rate of rent further and fixed at Rs.30 per sq.ft. The Appellate Authority also discarded Exts.X3(a) and X3(c) for the very same reason that no reliance can be placed on those documents, as they are under the investigation of Vigilance Department, on the allegation of collusion between the landlord and Municipality and the tenants Rajadhani Hotel and Josco jewellers, in the fixation of rent. 11. Therefore, the prime point to be considered in this revision is whether there is any illegality or impropriety, in taking of Exts.A3 and A5 to A7 into consideration, for fixing the fair rent of the petition schedule building, on a finding that Exts.A5 to A7 are lease deeds though the nomenclature of the said document is licence. We have meticulously examined Exts.A3 and A5 to A7 in view of the Rcr250&251/2016 14 divergent findings of the courts below that those documents are lease deeds and licence deeds respectively. It is true that the nomenclature of Exts.A5 to A7 is licence deed; but the nomenclature of a document is not a decisive or determinant factor in deciding the nature of transaction under a document. (In State of U.P and others v. Lalji Tandon [AIR 2004 SCC 32). 12.On an examination of Exts.A5 to A7, we also find that in the aforesaid documents the exclusive possession of the building was transferred to the respective tenants, and no restriction is seen imposed in the usage of the building by the tenant, though the nomenclature of the document is licence. The intention of the parties to the document are very clear to the effect that the tenanted premises were transferred as lease and not as Rcr250&251/2016 15 licence. 13. In this context, the distinction between 'lease' and 'licence' is significant and relevant. The lease is not a mere contract, but envisages and transfers an interest in the demised property by creating a right in favour of lessee _in rem_ . But licence only makes an action lawful without which it would be unlawful but no transfer of any interest in favour of the licensee in respect of the property. If the agreement between the parties shown an intention to create an interest in the property in favour of the grantee, it is said to be a 'lease'. The licence on the other hand, does not create an interest in property. Exts.A5 to A7 clearly show that an interest was created in the demised property in favour of the tenants. In the above analysis, the Appellate Authority Rcr250&251/2016 16 justified in taking Exts.A5 to A7 into consideration on a finding that they are lease deeds and not licence deeds. Ext.A5 is a licence deed dated 20.10.2004 executed between the Municipal Council,Kottayam and tenant by name Ismail and the rate of rent of the said building is Rs.51.50 per sq.ft. Ext.A6 is the licence deed dated 13.10.2009 executed between the Municipal Council, Kottayam and one P.J.Jaison and the rate of rent of the said building is Rs.62.44 per sq.ft. Ext.A7 is another lease deed dated 28.10.2009 executed between the Municipal Council, Kottayam and one Saidu Mohammed and the rate of rent of that building is Rs.65 per sq.ft. Ext.A3 is apparently a lease deed, wherein, the possession of the building therein was transferred to the tenant @ Rs.36.69 per sq.ft. We are of the opinion that the Rcr250&251/2016 17 aforesaid documents show the rent prevailing in the locality from 2004 onwards. Ext.A4 is another lease deed, which would show the rent @ Rs.13.7 per sq.ft. In the above view, the Appellate Authority is justified in observing that Exts.A3 to A7 would show that the rent prevailing in the locality per sq.ft is Rs.13.7 per sq.ft to Rs.79. When Ext.A4 alone shows rent at a rate below Rs.30, all other four rent deeds show rent at a rate above Rs.30/-. It follows that the court below is justified in placing reliance on Ext.A3, a lease deed which was executed by PW4 in favour of the petitioner herein as basic document. There is no illegality or impropriety in the determination of fair rent made by the Appellate Authority and the fair rent fixed at the rate of Rs.30/- is just and reasonable. Rcr250&251/2016 18 14. The learned counsel for the respondent vehemently contended that the courts below went wrong by discarding Exts.X3(a) and X3(c) and Ext.B1. As rightly observed by the courts below, no reliance can be placed on Ext.B1 as the same was issued under the Right to Information Act only. Similarly, Ext.X3(a) and X3(c) council resolution and agreements, which are under the custody and investigation of the Vigilance Department, can never be taken into consideration for a judicial determination of fair rent. So also, the rent shown in Exts.B1, X3(a) and X3(c) are unbelievable, when comparing with the prevailing rent shown by all other documents. 15. At the outset itself we have noticed that though there was no revision of rent since 1947, the Rent Control Court has not considered all the parameters stated in the Rcr250&251/2016 19 guideline issued by this Court in _Edger Ferus v. Abraham Ittycheria [2004 KHC 123]_ . But the Appellate Authority fixed the fair rent in observance with all the parameters shown in the aforesaid decision. Besides the variation in the state of economy caused by inflation, the Appellate Authority has considered the cost of construction, increase in the tax, market value of the land, cost of building materials and wages of labourers and cost of construction materials etc., while determining the fair rent. 16. The Appellate Authority fixed the fair rent @ Rs.30 per sq.ft from the date of filing the Rent Control petition with 5% increase per sq.ft in every succeeding year. But, we are of the opinion that the Appellate Authority cannot be justified in fixing the fair rent at the same rate from 2011 to the date of Rcr250&251/2016 20 judgment passed by the Appellate Authority. We are of the view that, it is just and proper to fix the fair rent @ Rs.25 per sq.ft from the date of rent control petition to the date of judgment passed by the Appellate Authority and Rs.30 per sq.ft from the date of judgment passed by the Appellate Authority, with 5% increase per sq.ft in every succeeding year. 17. In the result, the fair rent of the plaint schedule building will stand re-fixed @ Rs.25 per sq.ft to the total area of 1800 sq.ft. from the date of rent control petition with 5% increase per sq.ft in every succeeding year till the date of judgment of the Appellate Authority and thereafter, the rent will be @ Rs.30 per sq.ft, with 5% increase per sq.ft. in every succeeding year. Rcr250&251/2016 21 18. All interlocutory applications will stand closed. The appeals are allowed in part. **Sd/-** **K.HARILAL JUDGE Sd/ANNIE JOHN JUDGE** Sl/SB