Holding

The arbitration clause does not preclude the writ petition, the Hiring Committee's recommendation is not binding absent a contractual agreement, and the High Court's directions are set aside.

Summary

The National Sample Survey Organisation (NSSO) was a tenant of Champa Properties Ltd. and vacated the premises in 1992, contesting a rent increase demanded by the landlord based on a Hiring Committee's recommendation. The landlord filed a writ petition seeking enforcement of the higher rent, relying on an arbitration clause in three lease agreements and on government orders prescribing rent reassessment. The Supreme Court examined whether the arbitration clause barred the writ petition, whether the Hiring Committee's recommendation was binding, and whether the High Court's directions were justified. It held that the arbitration clause did not cover the dispute because the writ petition arose from government orders, not the lease contracts, and that the Hiring Committee's assessment was merely advisory unless expressly made binding by contract. Consequently, the Court set aside the High Court's orders, dismissed the writ petition, and ordered the landlord to refund any excess rent paid. The appeal was allowed.

Issues considered

Whether the writ petition is maintainable despite the arbitration clause in the lease agreements.
Whether the recommendation of the Hiring Committee on rent revision is binding on the parties.
Whether the directions issued by the Calcutta High Court were warranted.

Legislation cited

West Bengal Premises Tenancy Act, 1956

Subjects

rent revisionlease agreementarbitration clauseHiring Committeegovernment ordersWest Bengal Premises Tenancy Actwrit petitioncontractual binding

Judgment

[2009) 10 S.C.R. 429

NATIONAL SAMPLE SURVEY ORGANISATION & ANR. A
v.
CHAMPA PROPERTIES LTD. & ANR.
(Civil Appeal No. 4153 of 2009)
JULY 7, 2009
B
[R.V. RAVEENDRAN AND J.M. PANCHAL, JJ.]

RENT AND EVICTION:

WEST BENGAL PREMISES TENANCY ACT, 1956: C
Lease agreements providing for settlement of disputes
by arbitration - Instead Writ Petition filed - Maintainability of
Writ Petition - Held: Maintainable since the arbitration clauses
" did not cover or govern the issues raised in the Writ Petition
- Recommendations of the Hiring Committee - Neither D
binding on the Hiring Department nor on the lessors - Orders
of Single Judge and Division Bench set aside - Respondent
to refund the amounts in excess of agreed rent to the appellant
within 3 months.
E
Appellant was a tenant under Respondent and
vacated the premises in 1992 for the reasons that the
premises was old and lacking in amenities and the
Respondent not willing to carry out repairs/
improvements and yet demanding higher rent, which the F
appellant was not willing to pay. The Respondent went
on representing for revision of rent from 1988. The
appellant was not agreeable for revision of rent
recommended by the Hiring Committee. Meanwhile the
respondent filed a writ petition and the Single Judge G
directed the appellant to pay rent in accordance with the
recommendations of the Hiring Committee. On appeal,
Division issued certain directions including payment of
50% arrears and reconsideration by the Hiring Committee
429 H
430 SUPREME COURT REPORTS [2009] 10 S.C.R.

A of its recommendations in the light of the observations •
of the High Court in Rabindra Nath Nandi. In appeal to this
Court, on the basis of the contentions raised by the
parties, the following question arose for consideration:

(i) Whether the writ petition by the respondent
B
was not maintainable, in view of clause 17 of
the lease agreements dated 11.4.1989,
10.5.1990 and 29.4.1991 providing for
settlement of disputes by arbitration ?
c (ii) Whether the recommendation by the Hiring
Committee was binding on the appellant and
whether the respondent-landlord could
enforce payment of the rent recommended by
the Hiring Committee ?
D
(iii) Whether the directions issued by the High
Court in the impugned order dated 31.8.2006
are warranted or justified ?

Allowing the appeal, the Court
E
HELD: 1. A careful reading of the arbitration clause
in the lease agreements discloses that what is referable
to arbitration, is any dispute or difference concerning the
subject matter of said three lease agreements or any
F clauses thereof or any matter arising out of the said lease
agreements. But the writ petition was not in respect of
any of the said three lease agreements or any term
thereof. The relief sought in the writ petition did not relate
to, nor arise from the contract of lease (the three lease
G agreements containing the arbitration agreement) but
allegedly arose out of the O.M. dated 13.6.1985 and
related official memoranda issued by the Government of
India. The subject matter of those official memoranda was
not subject to any provision for arbitration. The arbitration
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 431
CHAMPA PROPERTIES LTD.

.... clauses in the lease agreements dated 11.4.1989, A
10.5.1990 and 29.4.1991, therefore, did not cover or
govern the issue raised in the writ petition. Therefore the
arbitration clause in the three lease agreements would not
come in the way of the writ petition being entertained.
[Para 11] [440-D-E; 441-B-D] B
Titagarh Paper Mills Ltd. v. Orissa State Electricity Board
-I 1975 (2) sec 436, relied on.
Ji
2.1. Neither the Single Judge nor the Division Bench
of the High Court examined the scope, purport and effect c
of the O.M. dated 13.6.1985 and other related government
orders. They merely relied upon the earlier judgment in

- >-
Rabindra Nath Nandi and held that the appellant was
legally bound to increase the rent from 3.8.1988 as per
the recommendations of the Hiring Committee. [Para 13] D
~-"
(442-D-E]

_,
2.2. The elaborate decision in Rabindra Nath Nandi
missed the core issue and ignored the relevant law
governing landlords and tenants. A lease is governed by
E
the terms of the contract (deed or agreement of lease)
between the parties. If the contract prescribes a rent for
the period of lease, the same being agreed rent, it is

... ~
binding on the parties. If the lease provides for revision
of rents periodically, and specifies the method and
manner of revision, such revised rent would also be the F
agreed rent. Where a statute governing tenancies and/or
rents provides for fixation of rent or increases in rent, and
such statute is applicable to the tenancy in question, then
the rent will have to be determined in accordance with the
statutory provisions. Subject to the above, any increase G
4 ·I can be only by consent of parties. If the lease period
expires and the parties are not able to agree upon the
increase in rent or terms of renewal, it is open to the
landlord to initiate action for evicting the tenant. But
under no circumstances can the landlord require the H
432 SUPREME COURT REPORTS (2009] 10 S.C.R.

A tenant to pay during the period of a lease, a rent higher •
than what is agreed between them or what is provided
for in the statute. The assessment or determination of rent
by the Hiring Committee is an expert advice to the lessee
and nothing more. Except where there is an agreement
B to abide by the fixation of rent by the Hiring Committee,
neither party can insist or require the other party to abide
by the rent assessed by such Committee, as
determination of rent by the Hiring Committee is not
statutory or contractually binding on the parties. [Para 16]
C [449-0-H; 450-A-B]

2.3. The fundamental requirement relating to consent,
has been ignored in Rabindra Nath Nandi. The said
decision proceeds on the assumption that the O.M. dated
13.6.1985 and other related circulars prescribed the
-
D procedure for revision of rents every five years, and there
was an implied consent on the part of the Government
Department to revise the rent as assessed by the Hiring
Committee and pay rent in terms of it. It also proceeds
on the assumption that whenever government takes a
E premises on lease, irrespective of the contract of lease,
the OM dated 13.6.1985 and related circulars would make
it obligatory for the government to revise the rent every
five years. Both these assumptions are baseless and
arise from a misreading of the said OMs. The decision
F ignores the specific provision in the OM dated 13.6.1985
that any assessment or reassessment of rent by the
Hiring Committee will be only recommendatory and not
binding upon the Hiring Department, which takes the
premises on lease from the private landlord. The OM
G dated 13.6.1985 specifically states that the fif!al decision
regarding the actual rent to be paid to the owner of the
building will rest with the authorities desiring to hire the
property keeping in view the two figures of rent indicated
in the certificate, their own needs and availability of the
H accommodation in the locality at the rent to be
NATIONAL SAMPLE SURVEY ORGANISATION v. 433
... CHAMPA PROPERTIES LTD .

)(
determined. (Para 19] (450-F-H; 451-A-C] A

2.4. As rightly observed in Rabindra Nath Nandi, the
Government was aware of the fact that the Hiring
Departments or their individual officers will not have the
expertise to assess the rent. Therefore, it devised a B
procedure for assessment or reassessment of rent by an
Expert Committee (Hiring Committee) whose
recommendation would help the Hiring Department to
take a decision in regard to fixation of rent or revision of
rent. But the mere fact that a mechanism had been C
evolved to assess or reassess the rent by the Hiring
Committees or that a Hiring Department had referred a

- demand for increase for rent by the landlord, to the Hiring
Committee for its assessment/recommendation, does not
mean that the assessment or reassessment of rent by the
Hiring Committee is binding upon the Hiring Department D
or the landlord. Nor will the assessment by the Hiring .
Committee, would create in the private landlord or the
tenant (Government Department), an enforceable right
with reference to the recommendation of rent made by
the Hiring Committee, against the other party to the lease. E
The Hiring Committee is an expert body, and a consultant
to the lessee department. In considering the
recommendations of the Hiring Committee, the Hiring
department is of course expected to act reasonably and
not arbitrarily. The Hiring department may also usually F
abide by the advise of the Hiring Committee. But the
Hiring department is not bound by its recommendation.
(Para 20] [451-D-H; 452-A]

2.5. In the absence of an express contract agreeing G
to be bound by the recommendation of rent by the Hiring
Committee, its recommendations are neither binding on
the hiring departments nor on the lessors. Rabindra Nath
Nandi, to the extent it holds to the contrary, is not good

H
434 SUPREME COURT REPORTS [2009] 10 S.C.R.

A law. [Para 20] [452-C-D]

Regional Director (ER, AMO), Department of Atomic
Energy v. Rabindra Nath Nandi (A.P.O. No.243-244/1996
decided on by Calcutta High Court on 16.5.1997/18.9.1998
overruled.
8
3. It is relevant to note that even the respondent
proceeded on the basis that the reassessment by the
Hire Committee was only recommendatory and was not
binding. In its letter dated 27 .6.1989 addressed to the
C appellant, the respondent referred to the
recommendation by the Hiring Committee in regard to a
rent of Rs.13.10 per sq. ft. (inclusive of municipal taxes),
but requested the appellant to fix the rent at Rs.19 per sq.
ft. exclusive of municipal taxes with effect from 3.8.1988.
-
D Even in the writ petition filed by respondent, the
contention of the respondent was not that the rent of
Rs.13.10 recommended by the Hiring Committee was only
provisional and its prayer was for increasing the rent in
terms of the O.M. dated 13.6.1985 for the period
E commencing from 3.8.1988. [Para 21] [452-E-G]

4. The appellant has categorically stated that it was
not willing to pay the higher rent suggested by the Hiring
Committee. In fact, it made it clear that it was not willing
to pay higher rent as the landlord failed to carryout
F repairs/maintenance and as it vacated the premises.
There is therefore no question of subjecting the question
-
of rent to another round of determination by the Hiring
Committee. The respondent is not entitled to the reliefs
sought in the writ petition. [Para 22] [452-H; 453-A-B]
G
5. The orders of the Single Judge and Division
Bench of the High Court are set aside. The respondent
shall refund all amounts received in excess of the agreed
rent, to the appellant within three months. [Para 23] [453-
H 8-C]
NATIONAL SAMPLE SURVEY ORGANISATION v. 435
CHAMPA PROPERTIES LTD.

Case Law Reference: A
1975 (2) sec 436 relied on Para 12

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4153 of 2009.
B
From the Judgment and Order dated 31.8.2006 of the High
Court of Calcutta in A.P .O.T. No. 295 of 2003, APO 'No. 303
of 2003, W.P. No. 1679 of 1985.

Amarendra Sharan, ASG, Shweta Garg, Amit Tiwari, C
Ashish Gopal Garg and D.S. Mahra for the Appellants.

Jaideep Gupta, C. Mukund, Ashok Jain, Pankaj Jain, S.
Sharma, Amit Kasera, Vandana Anand and Bijoy Kumar Jain
-\.
for the Respondents.
D
The Judgment of the Court was delivered by

R.V. RAVEENDRAN, J. 1. Leave granted. Heard the
learned counsel.

2._ The National Sample Survey Organization, the appellant E
herein was the tenant under the first respondent (for short the
'respondent') in respect of premises No.25A, Shakespeare
Sarani, Calcutta, a building constructed in 1925 with a carpet
area of 16157 sq. ft. The premises was taken on lease on
1.6.1972 on a monthly rent of Rs. 13, 733/- (at the rate of Rs F
0.85 per sq. ft.). On a request by respondent for increase in
rent, the appellant made a reference to the Hiring Committee
for reassessment on 1.4.1986. Based on its recommendation,
the rent was increased to Rs.74,645/- per month (that is
Rs.4.62 per sq. ft.) with retrospective effect from 3.8.1983 and G
the increase was communicated as per the appellant's letter
dated 27.7.1988. The very next day (28.7.1988), the
respondent wrote to the appellant again requesting for
reassessment of the rent for the period commencing from
H
436 SUPREME COURT REPORTS [2009] 10 S.C.R.

A 3.8.1988 (that is, from the date of expiry of five years from the
.
date of last increment) by referring the matter to the Hiring ,.
Committee. Acting on the said request, the appellant again
made a request to the Hiring Committee, by letter dated
25.10.1988 for re-assessment of rent.
B
3. The Hiring Committee (consisting of three members -
(i) Superintending Engineer, Calcutta Central Circle No.II,
~
CPWD, (ii) the Estate Manager, and (iii) Surveyor of Works
cum Executive Engineer, Calcutta Central Division No.IV
CPWD) by its proceedings dated 6.6.1989, reassessed and
c recommended a rent of Rs.13.10 per sq. ft. of carpet area
(inclusive of all municipal taxes) with effect from 3.8.1988. The
appellant found the increase suggested by the Hiring
Committee was unreasonably high and therefore initiated
correspondence with the Hiring Committee for reviewing the ,,j

D reassessment. When the matter was pending, the respondent,
by letter dated 27.6.1989, requested the appellant to fix the rent
at Rs. 19/- per sq.ft. plus municipal taxes.

4. In the meanwhile, the respondent landlord entered into
E lease agreements every year, with the appellant on 11.4.1989,
10.5.1990 and 29.4.1991 each for a duration of one year, on
a monthly rent of Rs.74,645.34.
•
5. As the premises was old and lacking in amenities and ...
as the respondent was not interested in carrying out repairs/
F improvements in view of its intention to demolish and
reconstruct the building, and as the appellant was unwilling to
pay a higher rent, the appellant, by its letter dated 16.3.1992,
notified the respondent of its intention to vacate the premises.
In pursuance of it, the appellant vacated and delivered vacant
G possession of the premises to the respondent on 25.6.1992. I
,....
The respondent however went on representing for revision of
rent with effect from 3.8.1988. The appellant was not agreeable
for the rent recommended by the Hiring Committee, and wrote
to the Hiring Committee on 22.5.1992 and 5.11.1993 to review
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 437
CHAMPA PROPERTIES LTD. [RV RAVEENDRAN, J.]

the reassessment of rent, and furnished several documents in A
_,
support of its request. The Hiring Committee sent a reply dated
4.2.1994 stating that its recommendation in regard to rent will
not be reviewed.

6. When matters stood thus, the respondent filed W.P. B
No.1675/1995 in the Calcutta High Court for the following reliefs
: (i) a direction to respondents to reassess the rent from
~ 3.8.1988 in accordance with the guidelines contained in the
Government order dated 13.6.1985 and related orders/
circulars; and (ii) to give effect to the decision of the Hiring
Committee recommending Rs.13.10 per sq. ft. with effect from
c
3.8.1988 by way of interim reassessment of rent subject to final
assessment.

_, 7. In the said proceedings, by interim order dated 6.2.1998
ml!'· and 24.2.1998, the High Court directed the appellant to pay D
Rs.5.08 (that is the rent of Rs.4.62 plus 10% increase) for the
period 3.8.1988 to 25.6.1992. The appellant paid the rent
accordingly. The writ petition was allowed by a Learned Single
Judge, by order dated 22.8.2002, directing the appellant to pay
the rent in regard to the period 3.8.1988 to 25.6.1992, to the E
respondent in accordance with the recommendations of the
Hiring Committee, within 6 weeks with interest at the rate of
,. 8.33% from 1998 till date of payment and in default to make
payment within 6 weeks, pay interest at 10% per annum. The
learned Single Judge was of the view that the matter was F
covered by a decision of the division bench of that High Court
in Regional Director (ER, AMO), Department of Atomic Energy
v. Rabindra Nath Nandi (A.P.O. No.243-244/1996 decided on
16.5.1997/18.9.1998) and that the appellant was bound to pay
increased rent as assessed by the Hiring Committee.
.... , 8. Feeling aggrieved, the appellant challenged the order
G

of the learned Single Judge in an appeal. By interim order
dated 16.6.2003, the division bench stayed the operation of the
order of the Learned Single Judge, subject to appellant
H
438 SUPREME COURT REPORTS [2009] 10 S.C.R.

A depositing 50% of the rent calculated at the rate of Rs. 13/10
per sq.ft. recommended by the Hiring Committee, with liberty
to the respondent to withdraw the same. The Division Bench
disposed of the appeal by order dated 31.8.2006 with the
following directions, purporting to follow the decision in
B Rabindra Nath Nandi (supra) :

(i) The appellant should deposit the balance 50% of the
arrears calculated at the rate of Rs.13.10 per sq.ft. within •
two weeks.

C (ii) As the Hiring Committee had made available the
details of calculations, the appellant and respondent should
offer their views on the assessment of rent by Hiring
Committee within four weeks.

D (iii) The Hiring Committee should reconsider the matter (in
the light of the observations of the High Court in Rabindra
Nath Nandt) and take a final decision within three months
thereafter.

(iv) The Hiring Committee should communicate its
E recommendations along with all calculations in support of
it, to both the parties.

(v) The appellant should then take a decision on the said
recommendations in the light of the observations contained
F in Rabindra Nath Nandi within four weeks thereafter. If the
recommendation was not accepted, it should
communicate the reason for non-acceptance to the
respondent within 48 hours thereof. If the recommendation
was accepted, all outstanding dues should be paid to
G respondent with interest at 10% per annum, within four
weeks.

(vi) The Bank guarantee furnished by the respondent should
continue till the controversy was finally resolved. The
respondent would be entitled to withdraw further 50% of
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 439
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN, J.]

the amounts deposited by the appellant by furnishing a A
further bank guarantee.

9. The said order is challenged in this appeal by special
leave. The appellant contends that the writ petition was not
maintainable, as the lease agreement contained an arbitration
B
clause for settlement of disputes. It also contends that the
landlord was entitled to increase in rent only in terms of the
:. provisions of the West Bengal Premises Tenancy Act, 1956 and
not otherwise. It is further contended that the reassessment by
the Hiring Committee was only a recommendation and as the
increase recommended by the Hiring Committee was arbitrary
c
and excessive, it was not bound to accept the same. Lastly it
is pointed out that it had already vacated the premises on
25.6.1992 and the tenancy till that date was regulated by lease
agreements executed on 11.4.1989, 10.5.1990 and 29.4.1991
which stipulated a monthly rent of Rs.74,645/-, and therefore it D
.J ~

was not liable to pay any increased rent. On the contentions
urged, the following questions arise for our consideration :

(i) Whether the writ p~tition by the respondent was not
-:; maintainable, in view of clause 17 of the lease agreements E
dated 11.4.1989, 10.5.1990 and 29.4.1991 providing for
settlement of disputes by arbitration ?
}
(ii) Whether the recommendation by the Hiring Committee
was binding on the appellant and whether the respondent-
landlord could enforce payment of the rent recommended F
by the Hiring Committee ?

(iii) Whether the directions issued by the High Court in the
impugned order dated 31.8.2006 are warranted or justified
? G
Re : Question No. (i) :

10. The appellant submit that the parties had entered into
three lease agreements dated 11.4.1989, 10.5.1990 and
H
440 SUPREME COURT REPORTS [2009] 10 S.C.R.

A 29.4.1991 in regard to the periods 1.4.1989 to 31.3.1990,
1.4.1990 to 31.3.1991and1.4.1991 to 31.3.1992 and all the
three agreements contained an arbitration clause (Clause No.
17) providing that any dispute or difference arising between the
parties, concerning the subject matter of the lease agreements
8 or any covenant. clause or thing contained therein or otherwise
arising out of the said leases, shall be referred to an arbitrator
to be appointed by the Government of India and the decision
of such arbitrator shall be conclusive and binding on the parties •
hereto. Having regard to the said provision for arbitration, the
C appellant contends that the remedy of the landlord-respondent.
if it wanted any increase in rent, was to seek reference to
arbitration and the writ petition was misconceived and not
maintainable.

11. A careful reading of the arbitration clause in the lease
D agreements discloses that what is referable to arbitration, is
any dispute or difference concerning the subject matter of said
three lease agreements or any clauses thereof or any matter
arising out of the said lease agreements. But the writ petition
was not in respect of any of the said three lease agreements
E or any term thereof. The grievance of the respondent put forth
in the writ petition is as under :

"On 28. 7.1988, the respondent requested the appellant to
refix the rent for a period of five years with effect from ·
3.8.1988 by referring the matter to the Hiring Committee.
F
The appellant accordingly referred the matter to the Hiring
Committee by letter dated 25.10.1988. The Hiring
Committee after considering the matter, recommended
payment of rent of Rs.13.10 per sq. ft. of carpet area,
inclusive of all municipal taxes with effect from 3.8.1988.
G The appellant, a department of Government of India, was I P-
bound by the said recommendation, having regard to the
terms of the Official Memoranda dated 19.7.1972,
1.9.1982, 9.5.1983, 22.8.1984 and 13.6.1985 of
Government of India. But the appellant failed to implement
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 441
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN, J.)

" the said recommendation of the Hiring Committee. Nor did A
it choose to itself reassess the rent from 3.8.1988 in terms
of the O.M. Dated 13.6.1985, if it was not agreeable to
accept the recommendation of the Hiring Committee.
Therefore the appellant should be directed to increase the
rent from 3.8.1988 in terms of the O.M. dated 13.6.1985." B
The relief sought in the writ petition thus did not relate to, nor
/
\ arisefrom the contract of lease (the three lease agreements
containing the arbitration agreement) but allegedly arose out
of the O.M. dated 13.6.1985 and related official memoranda
_, issued by the Government of India. The subject matter of those
c
official memoranda was not subject to any provision for
arbitration. The arbitration clauses in the lease agreements
-4 dated 11.4.1989, 10.5.1990 and 29.4.1991, therefore, did not
... cover or govern the issue raised in the writ petition. Therefore
the arbitration clause in the three lease agreements would not D
come in the way of the writ petition being entertained. We are
fortified in our view by the decision in Titagarh Paper Mills Ltd.
v. Orissa State Electricity Board (1975 (2) SCC 436] wherein
this Court held :
_.., E
"... when the Board decided to levy the coal surcharge on.
-l
the consumers receiving electricity from the Talcher-
_,I
Hirakund grid, it claimed to do so under Sections 49 and
59 and the Sixth Schedule to the Supply Act. We must,
therefore, first examine whether any of these provisions of F
the Supply Act empowered the Board to levy the coal
surcharge. We fail to see how the machinery of arbitration
contained in clause (23) of the agreement can possibly
cover such a question. The arbitration agreement in that
clause applies only to a dispute or difference 'as to the
G
4 -I supply of electrical energy hereunder or the pressure
thereof or as to the interpretation of this Agreement or the
right of the supplier or the consumer respectively to
determine the same or any other question, matter or thing
?rising hereunder.' The question as to whether the Board
H
442 SUPREME COURT REPORTS [2009] 10 S.C.R.

A had the power under Sections 49 and 59 and the Sixth )"

Schedule to the Supply Act to levy the coal surcharge is
not a question, matter or thing arising under the agreement.
It is a claim founded on the provisions of the Supply Act
to impose the coal surcharge in addition to the rates
B payable by the appellant to the Board under the
agreement. Such a claim clearly falls outside the ambit and
coverage of the arbitration provision contained in clause
(23) of the agreement. The arbitration agreement cannot
therefore, be regarded as a relevant factor which should
c legitimately influence the discretion of the Court in
declining to entertain the writ petition on merits."

(emphasis supplied)
l.-
Re : Questions (ii) and (iii) :
+
D
13. Neither the Single Judge nor the division bench of the
High Court examined the scope, purport and effect of the O.M.
dated 13.6.1985 and other related government orders. They
merely relied upon the earlier judgment in Rabindra Nath Nandi
and held that the appellant was legally bound to increase the
E ,_
rent from 3.8.1988 as per the recommendations of the Hiring
Committee.

14. It is necessary to refer to the background in which
..
Hiring Committees were constituted and the effect of the
F Official Memoranda relating to assessment/reassessment of
rent, before examining these questions. Government was taking
on rent several privately owned premises. The officers in
charge of the hiring departments of the government were not
experienced in real estate matters and lacked the technical
G expertise in rent fixation. They faced difficulties in verifying
whether the rents demanded by the landlords were reasonable •.
or excessive. Many a time, owners of plots were also required
to construct buildings or make additions to existing rented
premises, to meet the specific requirements of the government
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 443
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN, J.]

departments. That also gave rise to problems in assessing the A .
reasonable rent. Sometimes, there was also collusion between
the building owners and the local officers of the government
departments, resulting in fixation of exorbitant rent for the
premises, to the detriment of public interest. Having thus felt
the need to have expert advise, the government constituted B
'Hiring Committees' consisting of Engineers from Public Works
department, in various cities to advise the hiring gov~rnment
departments proposing to take private buildings on rent. A
somewhat similar difficulty was also faced when it became
necessary to increase the rent at the time of renewal or c
extension of lease, as refusal to increase rents, after the expiry

- · of the lease period was likely to result in action for eviction. It
was therefore necessary to periodically re-assess the rent for
purpose of revising the rent. Where the contracts of lease did
not provide for periodical increases, subject to facts and
0
circumstances of each case, it was thought fit to increase the
rent every five years, by consent of both parties. Here again,
the expertise of the Hiring Committee was required to assess
the increase in rent, so as to enable the lessee departments
to negotiate with the landlords to arrive at an agreed increase E
in rent.

(14.1.) The first circular regarding revision in rent was
issued by the Government of India on 19th July, 1972. It directed
that rents once assessed cannot be enhanced even by mutual
agreement. But a request from the landlord for revision was to F
be forwarded by the hiring department to the CPWD. The
CPWD authorities were required to decide whether the rent
required an equitable revision, after ascertaining whether any
of the following circumstances existed :
• G
(i) Alternations/additions to the building having been
carried out by the landlord, thereby increasing its
effective utilizable area;

(ii) Additional facilities/amenities having been provided
H
444 SUPREME COURT REPORTS (2009] 10 S.C.R.

A in the building (such as additional fans, geysers, )

bath rooms, additional e!ectric appliances etc.) by
the landlord, after the initial letting;

(iii) Increase in the property/house tax by the local
authorities;
B
(iv) Imposition of new element of tax such as education
cess by the State/local authorities.

(v) The rent control law applicable to the town/city
c concerned requiring increase in rent.

(14.2) The subsequent OM dated 1st September, 1982 _
noted that the standard lease deeds provided for the repairs
to be carried out by the landlord and in default of such repairs
by the landlord, the government could execute the repairs and
D recover the cost from the rent. It was also noted that the • ~-

landlords were not undertaking repairs or works of
maintenance, as they were not assured of suitable
enhancement in rent. A decision was therefore taken for
allowing periodical revision of rent payable for private buildings.
E It was decided that the reasonableness of the rent may be got
assessed from the CPWD on the expiry of the period of five
years (from the date of original assessment or the date of the
issue of the said OM dated 1.9.1982, whichever was later) and ~

after every five years thereafter. In making the reassessment,
F the CPWD was required to take into the account the variation
in the cost index during the relevant period in addition to the
factors mentioned in the O.M. dated 10.7.1972.

(14.3.) The third OM dated 9th May 1983 provided that the
reassessment was to be done keeping in view, the variation ...
G
in the cost of construction of the building including land
appurtenant thereto and the depreciation due to wear and tear
during the relevant period in addition to the factors mentioned
• -
in the O.M. dated 10.7.1972.
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 445
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN, J.]

(14.4.) The fourth OM dated 22nd August; 1994 provided A
the following clarifications : (1) No initiative for revision was to
be taken by the government (tenant) and the process of
reassessment should be initiated only after a request from the
owner of the leased premises, the later of the dates between
the date of receipt of the request and the date on which the B
revision was due being adopted as the date for revision of rent.
(2) In all such cases or reassessment of reasonable rent, a
fresh lease agreement in the form prescribed was to be entered
" into with the concerned landlord. (3) Wherever Hiring
Committees were functioning (such as in Bombay, Calcutta, c
Delhi etc.}, refixation of rent was to be done by such committees
and intimated to the concerned departments with details. (4)
All the Ministries/Departments were required to finalize the
· cases of reassessment of rents in consultation with the
".
4 concerned Hiring Committee. D
(14.5.) The last OM dated 13.6.1985 required the Hiring
Committees to follow the guidelines given below, while
reassessing the rents :

"(i) to work out the reproduction cost of the building as on E
the date of hiring based on the ruling cost of building
construction in the locality.

{ii) to work out the depreciated value of the property
assuming a straight-line variation of 'depreciation
F
depending on the age of the building.

(iii) to work out the land area appurtenant to the building
taking into account local bye laws or in its absence with
reference to the general practice in the locality.
~ G
~ .f (iv) to work out the cost of land on the basis of prevailing
market rates for comparable land in the locality and also
the value of land appurtenant to the building and the surplus
land separately.
H
446 SUPREME COURT REPORTS [2009] 10 S.C.R.

A (v) to add the cost of appurtenant land to the depreciated •
value of the building to assess the reasonable return on
the property.

(vi) to add : (a) the actual Municipal taxes; (b) maintenance
and repairs (12% of the Gross returns) and (c) an
B
appropriate provision in the form of a sinking fund for
recovery of capital after expiry of life of the building (with
reference to Sinking Fund Table).

The said OM dated 13.6.1985 contained the following
c further instructions:
"3. In all cases, in addition to working out the rent on the
principles of valuation as enumerated above, the market
rate of the rent prevalent in the area should also be
D ascertained by the authority giving the rent reasonableness • ~

certificate. Such inquiries may be made taking into
account rent being paid for properties taken on lease by
other government or semi government organizations like
public sector undertakings, banks etc. for similar
accommodation in the locality. Officers of the CPWD
E
should ascertain such figures of prevailing market rents
and collect authentic date preferably based on documents
taking into account the conditions included in the particular
lease deed of those premises from which the figure is taken
and also keeping in view the relative areas/size. The
F properties should be comparable in specifications and
amenities provided. They should make sure that the
conditions of hiring are similar and also ensure that the
factors for which landlord is landlord like municipal taxes,
maintenance and repairs etc in the cases are similar.
G
4. After assessing the two values for rent as enumerated
above i.e. rent based on recognized principles of valuation
and rent based on prevailing market rates in the locality,
~
-
\_

the reasonable rent certificate should indicate both figures
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 447
CHAMPA PROPERTIES LTD. [RV RAVEENDRAN, J.]
~ in all cases where the prevailing market rent is more than A
the rent calculated on the principles of valuation otherwise
the lower figure only need be indicated. The final decision
regarding the actual rent to the paid to the owner of the
building will rest with the authorities desiring to hire the
property keeping in view the two figures of rent indicated B
in the certificate, their own needs and availability of the
accommodation in the locality at the rent to be
+ determined."

5. Reassessment of rent of leased building will be treated
as fresh case of rent assessment and may be done c
according to the same principles as discussed in the
preceding paragraphs."

(emphasis supplied)
_..
~
D
15. In Rabindra Nath Nandi, which was followed by the
impugned judgment, the Calcutta High Court after referring to
the O.Ms. dated 19.7.1972, 1.9.1982; 9.5.1983, 22.8.1984 and
13.6.1985 concluded as under :

(a) The five circulars (Official Memoranda) in effect E
provided for and envisaged revision of rent by consent. As
the revision of rent could not be left to the discretion of any
• individual officer and to lay down a uniform policy,
• rationalized principles were laid down by the said circulars .
The said circulars regulated not only the grant of consent F
but also provided the method by which the consent could
be accorded by the government department.

(b) The policy decision contained in the said circulars did

-
not amount to contracting out of the. provisions of the West
G
• -Cf
Bengal Premises Tenancy Act, 1956, as the said Act
recognized the right of parties to determine by consent
(easonable rate of rent payable in regard to any premises
covered by the said Act.

H
448 SUPREME COURT REPORTS [2009] 10 S.C.R.

A (c) As the circular dated 13.6.1985 and connected circulars •
were valid and binding on the Hiring Department
(Government) and the Hiring Committee had the
jurisdiction to assess and recommend the rent, the
assessment by the Hiring Committee were binding on the
B Hiring Department (tenant) if the assessment has been
made strictly in the manner prescribed in the circulars.

(d) The Hiring Department cannot refuse to follow the
recommendations of the Hiring Committee except on the
ground that it was not in accordance with the circulars. If
c the recommendation by the Hiring Committee was not in
accordance with the circulars, the following procedure had
to be followed:

(i) The Hiring Committee must make available to the ,
~
D parties the details of all calculations made with regard to '
the assessment of rents withi11 four weeks from date;

(ii) any objections to such calculations by either party must
be specific and made within four weeks thereafter;

E (iii) within the same period any relevant evidence as to the
market rate for the periods in question with full particulars
may be submitted by either party to the Hiring Committee
with copies to the other side;

(iv) the Hiring Committee will then reconsider the matter
""
F
in the light of the observations in this judgment and take a
decision on the materials before it after verification within
period of three months thereafter;

(v) the recommendations alongwith all the calculations i~
G support thereof will be communicated to both parties withi
48 hours thereof; • ....
"
(vi) the Department shall take a decision on the
recommendation in the light of the observations contained
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 449
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN. J.]

-< in the judgment within four weeks thereafter. If the A
recommendation is not accepted, detailed reasons for
such non-acceptance must be recorded and
communicated to the landlord within 48 hours thereof;·

(vii) if the recommendation is accepted, payments of all B
outstanding on account of such reassessed rents must be
made to the landlords within four weeks from the date of
the decision together with interest at the rate of 8 1/3%
simple interest per annum calculated from the date on
which the payments were due upto the date of payment.
c
The decision is curiously silent as to what should happen if the
Hiring Department does not accept the recommendation of the
Hiring Committee and gives the reasons for such non-
acceptance. Be that as it may.
D
16. We are of the view that the elaborate decision in
Rabindra Nath Nandi missed the core issue and ignored the
relevant law governing landlords and tenants. A lease is
governed by the terms of the contract (deed or agreement of
lease) between the parties. If the contract prescribes a rent for E
the period of lease. the same being agreed rent. it is binding
on the parties. If the lease provides for revision of rents

., perio,dically, and specifies the method and manner of revision,
such revised rent would also be the agreed rent. Where a
statute governing tenancies and/or rents provides for fixation
F
of rent or increases in rent, and such statute is applicable to
the tenancy in question, then the rent will have to be determined
in accordance with the statutory provisions. Subject to the
above, any increase can be only by consent of parties. If the
lease period expires and the parties are not able to agree upon
the increase in rent or terms of renewal, it is open to the G
landlord to initiate action for evicting the tenant. But under no
circumstances can the landlord require the tenant to pay during
the period of a lease, a rent higher than what is agreed between
them or what is provided for in the statute. The assessment or
H
450 SUPREME COURT REPORTS [2009] 10 S.C.R.

A determination of rent by the Hiring Committee is an expert ),.

advice to the lessee and nothing more. Except where there is
an agreement to abide by the fixation of rent by the Hiring
Committee, neither party can insist or require the other party
to abide by the rent assessed by such Committee, as
B determination of rent by the Hiring Committee is not statutory
or contractually binding on the parties.

17. lfthe parties (lessor and lessee) agree that an increase
in rent determined by the Hiring Committee will be binding on
them, then of course, the determination by the Hiring Committee
c will be binding upon the parties. The lease deed/agreement

-
between the parties itself may contain a clause that the rent will
be as determined by the Hiring Committee and the parties will
be bound by the same. It is of some relevance to note that in
the year 1987, the respondent proposed to demolish the existing
D building and construct a new building. The appellant and ' ....
respondent entered into a memorandum of agreement dated
28.9.1987 under which the respondent agreed to put up an
additional building in the vacant space, and the appellant
agreed to temporarily shift to the said building to enable the
E landlord to demolish the old building and reconstruct the same ._
and thereafter let out the reconstructed building to the appellant.
The said agreement specifically contemplated (Proviso to
clause 31) fixation of rent as assessed by the Hiring
Committee. But the said proposal for demolition and •
F reconstruction did not materialise. Be that as it may.
19. The fundamental requirement relating to consent, has
been ignored in Rabindra Nath Nandi. The said decision
proceeds on the assumption that the O.M. dated 13.6.1985 and
other related circulars prescribed the procedure for revision of
G
rents every five years, and there was an implied consent on the
part of the government department to revise the rent as
assessed by the Hiring Committee and pay rent in terms of it.
>-
-
It also proceeds on the assumption that whenever government
takes a premises on lease, irrespective of the contract of lease,
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 451
CHAMPA PROPERTIES LTD. [RV RAVEENDRAN, J.]

the OM dated 13.6.1985 and related circulars would make it A
obligatory for the government to revise the reht every five years.
Both these assumptions are baseless and arise from a
misreading of the said OMs. The decision ignores the specific
provision in the OM dated 13.6.1985 that any assessment or
reassessment of rent by the Hiring Committee will be only 8
recommendatory and not binding upon the Hiring Department,
which takes the premises on lease from the private landlord.
The OM dated 13.6.1985 specifically states that the final
decision regarding the actual rent to be. paid to the owner of
the building will rest with the authorities desiring to hire the C
property keeping in view the two figures of rent indicated in the
certificate, their own needs and availability of the
accommodation in the locality at the rent to be determined.

20. As rightly observed in Rabindra Nath Nandi, the
government was aware of the fact that the Hiring Departments D
or their individual officers will not have the expertise to assess
the rent. Therefore, it devised a procedure for assessment or
reassessment of rent by an Expert Committee (Hiring
Committee) whose recommendation would help the Hiring
department to take a decision in regard to fixation of rent or E
revision of rent. But the mere fact that a mechanism had been
evolved to assess or reassess the rent by the Hiring
Committees or that a Hiring department had referred a demand
-· for increase for rent by the landlord, to the Hiring Committee
for its assessmenUrecommendation, does not mean that the F
assessment or reassessment of rent by the Hiring Committee
is binding unon the Hiring department or the landlord. Nor will
the assessmsnt by the Hiring Committee, would create in the
private landlord or the tenant (government department), an
enforceable right with reference to the recommendation of rent G
made by the Hiring Committee, against the other party to the
lease. The Hiring Committee is an expert body, and a
consultant to the lessee department. In considering the
recommendations of the Hiring Committee, the Hiring
H
452 SUPREME COURT REPORTS [2009] 10 S.C.R.

~
A department is of course expected to act reasonably and not
arbitrarily. The Hiring department may also usually abide by the
advise of the Hiring Committee. But the Hiring department is
not bound by its recommendation. For several reasons, it may
refuse to act upon it. The following portion of the proceedings
B dated 6.6.1989 of the Hiring Con .mittee itself makes this clear:
"From the directives contained in the office Memo dated
13.6.85, it will be observed that the final decision regarding •
the actual rent to be paid to owner of the premises will rest
with the authorities intending to hire the property, keeping
c in view the above two figures of rent, their own needs, and
, no less, the availability of accommodation in the locality
at the rent to be determined."

We are therefore of the considered view that in the absence
-
D of an express contract agreeing to be bound by the
• -
recommendation of rent by the Hiring Committee, its
recommendations are neither binding on the hiring departments
nor on the lessors. Rabindra Nath Nandi, to the extent it holds
to the contrary, in our considered view, is not good law.
E 21. It is relevant to note that even the respondent
proceeded on the basis that the reassessment by the Hire
Committee was only recommendatory and was not binding. In
its letter dated 27.6.1989 addressed to the appellant, the
respondent referred to the recommendation by the Hiring
F Committee in regard to a rent of Rs.13.10 per sq. ft. (inclusive
"
-
of municipal taxes), but requested the appellant to fix the rent
at Rs.19 per sq. ft. exclusive of municipal taxes with effect from
3.8.1988. Even in the writ petition filed by respondent, the
contention of the respondent was not that the rent of Rs.13.10
G recommended by the Hiring Committee was only provisional
and its prayer was for increasing the rent in terms of the O.M.
dated 13.6.1985 for the period commencing from 3.8.1988.
.. -
-
22. The appellant has categorically stated that it was not
willing to pay the higher rent suggested by the Hiring
H
NATIONAL SAMPLE SURVEY ORGANISATION v. 453
CHAMPA PROPERTIES LTD. [R.V. RAVEENDRAN, J.)

Committee. In fact, it made it clear that it was not willing to pay A
higher rent as the landlord failed to carryout repairs/
maintenance and as it vacated the premises. There is therefore
no question of subjecting the question of rent to another round
of determination by the Hiring Committee. The respondent is
not entitled to the reliefs sought in the writ petition. B

23. We therefore allow this appeal, set aside the orders
of the Single Judge and Division Bench of the High Court and
dismiss the writ petition. The respondent shall refund all
amounts received in excess of the agreed rent, to the appellant C
within three months.

-
"
G.N. Appeal allowed.