MISS LIZA ARULANANDAMversusSMT. A.S. SULOCHANA

                       MISS LIZA ARULANANDAM
A
                                   v.
                         SMT. A.S. SULOCl!ANA

                            SEPTEMBER 11, 1990

B     [M.H. KANIA, K.N. SAIKIA AND K. RAMASWAMY, JJ.]

          Constitution of India, 1950: Article IJ6-Special leave-Findings
    of facts-Based on consideration of evidence-Not to be interje~ed with.

          Tamil Nadu Buildings (Lease and Rent Control) Act, 1960: Sec-
    tion 4--Fixation of fair rent-Cost of construction-Market value-
c   Determination of-As on which date.

          The appellant-tenant was in occupation of a double storeyed
    building on a monthly rent ofRs.I70. The respondent-landlady flied an
    application under Section 4 of the Tamil Nadu Buildings (Lease and Rent
D   Control) Act, I960 for fixation of fair rent. The Rent Controller took
    note of the fact that I/3rd portion of the building was being used for
    residential purpose and the rest of the building for non-residential
    purpose, namely, for running a school. He also appointed an Engineer
    as Commissioner to evaluate the total cost of the building. The Commis-
    sioner adopted the rates prevalent in the Public Works Department and
E   submitted his report. On the basis of the Commissioner's report, the
    Rent Controller worked out the cost at Rs.I,SI,820. Accordingly, the
    fair rent for the said premises was arrived at Rs.ISIS per month at 12
    per cent gross return. Since the respondent-landlady had conttned her
    claim for the enhancement of fair rent to Rs.I,000 only, the Rent Con-
    troller fixed the fair rent at Rs.I,000. On appeal, the order of Rent
F   Controller was affirmed by the Court of Small Causes.

          On a revision being preferred, the High Court agreed with the
    valuation adopted and determined the fair rent on the basis that I /3rd
    of the premises was used for residential purpose and 2/3rd for non-
    residential purpose, and, as per sub-sections (2) and (3) of Section 4 of
G   the Act, worked out the rent at 9 per cent and I2 per cent respectively
    on the cost of construction arrived at. The High Court fixed the fair
    rent at Rs.1391.67 per month. It confirmed the fair rent of Rs.I,000 as
    was fixed hy the Rent Controller and as confined to by the Respondent-
    landlady.

H         This appeal, hy special leave, is against the High Court's order. It

                                       394
                     MISS LIZA v. SMT. SULOCHANA                       395

was contended that the cost of the building and its market value as           A
worked out was illegal, fallacious and untenable.

      Dismissing the appeal,

       HELD: 1. Section 4 of the Tamil Nadu Buildings (Lease and Rent
                                                                              B
Control) Act, 1960 prescribes the principles on the basis of which the
fair rent is to be fixed. In the light of those principles, the evidence
adduced by the parties was considered by the Rent Controller, the
appellate court and the High Court and they found that the fixation of
the fair rent was much in excess of the claim made by the Respondent·
landlady. Since she confined her claim to Rs.1,000 per month, the
courts below have fixed the fair rent at Rs.1,000. Therefore, on the          c
findings of facts based on consideration of the evidence, this 1;9urt
cannot interfere and come to its own conclusion, The finding is neither
vitiated nor illegal warranting interference. [210B-C]

      2.1 Sub-section 4 of Section 4 of the Act, clearly indicates that the
total cost of construction referred to in sub-sections (2) and (3) shall      D
consist of the market value as on the date of application for fixation of
the fair rent. [209C]

      2.2 It is obvious that at the time when this Court rendered its
decision in Nambiar's case there was no provision in Section 4 as to the
date on which the cost of construction was to be determined, and Rule         E
12 provided the manner in which the fixation of the fair rent has to be
made. The subsequent amendment brought on the statute in 1973, by the
Amending Act 23 of 1973, has incorporated sub-section (4) in Section 4
which amplified the date of application as the starting point to fix
market value. As such the fair rent has been rightly determined by the
courts below. [2090-E; HJ                                                     F

    K. C. Nambiar v. The IV Judge of the Court of Small Causes,
Madras & Ors., [1970] l SCR 906, referred to.

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2228
of 1982.                                                                      G

     From the Judgment and Order dated the 45. 7. 1980 of the Madras
High Court in C.R.P. No. 1150 of 1979.

      Anant Palli and E.C. Agarwala for the Appellant.
                                                                              H
    396         SUPREME COURT REPORTS                [1990] Supp. 1 S.C.R.

A         V. Balachandran and K. Vi jay Kumar for the Respondent.

          The Judgment of the Court .was delivered by

            K. RAMASWAMY, J. The appellant/tenant is in occupation of
    a double storeyed building bearing No .. 100, Aiya Mudali Street,
B
    Chintadripet, Mount Road, Madras on a monthly rent of Rs. 170. The
    respondent landlady filed an application under Sec. 4 of the Tamil
    Nadu Buildings (Lease and Rent Control) Act, 18 of 1960 as amended
    by Act, 23 of 1973, for short 'the Act'. The Rent Controller fixed the
    fa.ir rent at Rs. l,000 per month. On appeal, the Court of Small Causes,
    Madras and on further Revision under Sec. 25, the Madras High Court
c   confirmed the order. This appeal by special leave has been at the
    behest of the tenant. The admitted facts are that Y,rd portion of the
    building is being used for residential and the rest for non-residential
    purpose namely, for running a school. It is of 50 y_ears' old. Section 4
    of the Act provides the procedure for fixation of the fair rent, which
    reads thus:
D
               "Fixation of Fair Rent (I) The Controller shall on applica-
               tion made by the tenant or the landlord of a building and
               after holding such enquiry as he thinks fit, fix the fair rent
               for such building in accordance with the principles set out
               in the following sub-sections.
E
               (2) The fair rent for any residential building shall be nine
               per cent gross return per annum on the total cost of such
               building.

               (3) The fair rent for any non-residential building shall be
F
               twelve per cent gross return per annum on the total cost of
               such building.

               (4) The total cost referred to in sub-section (2) and sub-
               section (3) shall consist of the market value of the site in
               which the building is constructed, the cost of construction
G              of the building and the cost of provision of any one or more
               of the amenities specified in Schedule I as on the date of
               application for fixation of fair rent;

                    Provided further that the cost of provision of
               amenities specified in Schedule I shall not exceed-
H
         MISS LIZA v. SMT. SULOCHANA [K. RAMASWAMY, J.J                  397

             (i) in the case of any residential building, fifteen per cent;
                                                                                A
             and

             (ii) in the case of non-residential building, twentyfive per
             cent, of the cost of site in which.the building
                                                       l
                                                             is.constructed
             and the cost of construction of the building as determined
             under this Section."                                               B

             "5 .(a) The cost .of construction of the building including
             cost of internal water-supply, sanitary and electrical instal-
             lations shall be. determined with due regard to the rates
             adopted for the purpose of estimation by the Public Works
             Department of the Government for the area concerned,
             The Controller may, in appropriate cases, allow or di.sallow
                                                                                c
             an amount not exceeding thirty per cent of construction
             having regard tdthe nature of the building:      ·

             (b) The Controller shall deduct from the cost of construc-
             tion determined in the manner specified iiI clause (a)             D
             depreciation, calculated at the rates specified in Schedule
             ll."

        A bird's eye view of Sec. 4 indicates that the Controller shall
  hold an enquiry before fixing the fair rent preceded by an application
  made in that behalf either by the tenant or the landlord, in accordance
  with the principles set out in sub-sections 2 to 5 of Sec. 4. In case of a
  residential .building the fair rent shall be 9 per cent and for non-
  residential b.uilding 12 per cent gross return per annum· on the total
  cost of the building in question. The. l<,>tal cost shall consist of (a)
. market value of the site on which the building is constructed; (b) the
  cost of the construction of the building; ahd (c) the cost of provision of    F
  any one or more of the amenities specified i.n Schedule I which shall
  not exceed: (I) in the case of residential building 15 per.cent; and (2)
  in case of any non-residential building 25 per cent of the cost of the site
  in which the building was constructed as determined under Sec. 4 of
  the Act. The cost of the construction of the bui.lding would also include
  internal water supply, sanitary and electrical.installations. The estima-     G
  tion of its ratio thereof shall be· as is done by. the Public Works
  o·epartment of the Go.vernment for the area concerned. In addition to
  the above, having regard to the nature of the building, the Controller
  may, in appropriate cases, alluw or disallow an amount not exceeding
  30% of construction. The Comroller shall also deduct from the cost of
  construction determined in the manner specified in clause (a) of sub-         H
    398         SUPREME COURT REPORTS                  [1990] Supp. 1 S.C.R.

    section 5 of Sec. (4) the depriciation calculated at the rates specified in
A
    Schedule II. The determination of the fair rent of the building shall be
    fixed as on the date of the application filed for fixation of the fair rent.

          Section 5 of the Act provides the right for refixation of the fair
    rent under the Act for the reasons adumbrated therein with which we
B   are presently not concerned. An Engineer was appointed as a Com-
    missioner to evaluate the total cost of the building, who adopted the
    rates of the Public Works Department and submitted his report which
    is Exhibit P-2. He was also examined as a witness. The rates of the
    construction for terraced building were (a) for the ground floor at
    Rs .345 per sq. metre and (b) for first floor at Rs.320 per sq. metre. As
    regards the tiled portion, the cost of construction is Rs.300 per
c   sq. metre. The parties also adduced oral evidence. The Rent Control-
    ler after consideration thereof fixed the rates as afore-stated and he
    worked out the fair rent on that basis.

          The entire ground floor consists of 2927 .25 sq. ft. the area of two
D   shops wherein consists of 238 .00 sq. ft. The built up area of the first
    floor is 3330. 75 sq. ft., the tiled portion consists of 237 sq. ft. The cost
    of construction was estimated at Rs. J,99,300. The depreciation @ 1
    per cent, as is first class building, was given. He added the market
    value of the open site at Rs.20,000 and also annuity on the vacant
    portion @ 1 per cent was added. Accordingly the Rent Controller
E   worked out the cost at Rs.1,51,820. The fair rent as non-residential
    premises, at 12 per cent gross return, was fixed at Rs.1518 per month.
    Since the respondent, landlady confined to the enhancement of the
    fair rent at Rs.1,000, it was accordingly fixed. On appeal it was
    affirmed. In the revision, the High Court while agreeing with the
    valuation adopted, determined fair rent on the basis that VHd as being
F   used for residential purpose and 2/3rd for non-residential purpose. On
    that basis the learned Judge worked out at the rate of 9 per cent and
    12% as adumbrated in Sec. 4(2) and_(3) and fixed the fair rent. While
    upholdinE the depreciation at 1 per cent it fixed the fair rent
    Rs.1391.67 per month, but affirmed the fair rent at Rs. J,000 per
    month as was confined to, by the landlady. From this material matrix
G   the question at issue is whether the fixation of the fair rent by the Rent
    Controller, ultimately affirmed by the High Court, is illegal. The con-         1_
    tention of the learned counsel for the appellant/tenant that the cost of
    th~ building and its market value are illegal, is fallacious and unten-
    able. Section 4 not only provides the p~ocedure but also the principles
    and method on the basis of which the fair rent is to be determined. The
H   fixation of fair rent, therefore, is in consonance with Section 4. We
             MISS LIZA v, SMT. SULOCHANA !K. RAMASWAMY, J.]                 399

     accordingly affirm its legality. Realising this stark reality the counsel
     laid emphasis that the valuation of the cost of construction should be A
     as on the date of the ·construction of the building and placed strong
     re Hance on K. C. Nambiar v. The IV Judge of the Court of Small
     Causes, Madras & Ors., [1970] 1 SCR 906. J"herein this Court held
     that the expression 'cost of construction' means the cost of construc-
     tion of the building as originally erected with such additions as may be B
     required to be made for subsequent improvements. Rule 12 which
     prescribes the rate at which the cost of construction is to be computed
     plainly goes .beyond the tenqs of the section. Accordingly this Court
..   allowed the appeal and determined the fair rent as on the basis of the
     cost of construction. On that prernise the learned counsel for the
     appellant contended that calculation of the cost of construction to the
     residential as well as non-residential building should be with reference c
     to the date of application. We find no substance in the contention. It is
     already seen that sub-section 4 of Sec. 4 of the Act, clearly indicates
     that the total cost of construction referred to in sub-section 2 and
     sub-section 3 shall consist of the market value as on the date of appli-
     cation for fixation of the fair rent. It is obviou~ that at the time when D
     this court rendered the decision in Nambiar's case there was no provi-
     sion in Sec. 4 as to the date on which the cost of construction was to be
     determined, and Rule 12 provided in the manner in which the fixation
     of the fair rent has to be made. But subsequently it was amended by
     Amending Act 23 of 1973 incorporating in sub-section (4) of Sec. 4 of
     the Act as the date of making <m application. This is also apparent E
     when we see Se.c. 5 of the Act. Sub-section (3) of Sec. 5 clearly
     mentions that:

                 "Where the fair rent of any building has been fixed before
                 the date of the commencement of the Tamil Nadu Building
                 (Lease and Rent (:antral) Amendment Act, 1973 the                 F
                 Landlord or the ten.ant may apply to the Controller to refix
                 the fair rent in accordance wi.th the provisions of Section 4
                 and on such application, the Controller may refix the fair
                 rent."
 •
           Thus we are clearly of the view that the ratio in Nambiar's case        G
     no longer would apply. The subsequent amendment brought on the
     statute in 1973, amplified th.e date of application as the staring point to
     fix market value. On the basis of the valuation of the building
     estimated by the commissioner as per P. W .D. rates prevailing in the
     area and evidence produced· by the parties, the Rent controller· as
     modified by the High Court rightly determined the fair rent.                  H i
    400          SUPREME COURT REPORTS               [1990] Supp. I S.C.R.

A         It is next contended that the method adopted by the Controller
    and ultimately upheld by the High Court in fixing the fair rent is not
    correct. It is contended that the value of the building has been chang-
    ing from time to time as is reflected from the evidence on record and
    the courts below committed the gravest error in not considering the
    evidence in proper perspective. It is already seen that Sec. 4 prescribed
B
    the principles on the basis of which the fair rent is to be fixed. In the
    light of those principles the evidence adduced by the parties was con-
    sidered by the Controller, the appellate court and the High Court,
    found .that the fixation of the fair rent is much in excess to the claim
    made by the landlady. Since the ·landlady confined the claim for
    Rs. 1,000 per month, the courts below have fixed the fair rent at
c   Rs.1,000. Therefore, on the findings of facts based on consideration of
    the eviden~e, this Court cannot interfere and come to its conclusion.
    Thereby the finding is not vitiated nor illegal warranting interference.

           The appeal is accordingly dismissed with costs, fixed at Rs.5,000.

    G.N.                                                   Appeal dismissed.