V.S. KANODIA ETC. ETC.versusA.L.MUTHU (D) THR. LRS. & ANR

                        [2012) 6 S.C.R. 570


A                    V.S. KANODIA ETC.· ETC.
                                  V.
                 A.L.MUTHU (D) THR. LRS. & ANR.
                (Civil Appeal Nos. 5218-22 of 2012)
                           JULY 16, 2012
B
             [G.S. SINGHVI AND SUDHANSU JYOTI
                     MUKHOPADHAYA, JJ.]

       TAMIL NADU BUILDINGS LEASE AND RENT
C   (CONTROL) ACT, 1960:

        ss. 4(2) to 4(4) - Fixing of monthly rent - Non-residential
  premises - Held: In view of sub-ss.(2) to (4) of s.4, the market
  value of the site on which the building )s constructed is an
0 imporlant   factor to be taken into consideration for fixing the
  fair rent of the building - In the cases in hand, it was not open
  to the appellate authority to ignore the market value of the
  adjacent land already determined by the Rent Controller, on
  the ground of pendency of an appeal - The matter is remitted
E to the appellate authority for determination of limited issue
  relating to the market value of the land on which the building
  premises are situated, taking into consideration the evidence
  on record including Exh.A-4, Exh.A-9 and the market value
  of the adjacent land as was determined by the Rent Controller
  - The findings of the appellate authority with respect to
F 'classification of building', 'depreciation', 'plinth area',
  'construction charges' and of basic amenities of the petition
  building as affirmed by the High Courl are upheld.

      The respondents-landlords owned three non-
G residential properties. In respect of the 1st property, for
  the purpose of fixing the monthly rent, the Rent Controller
  determined the valuation @ Rs.25 lakhs per ground.
  Appeals thereagainst remained pending. In respect of

H                                570
 V.S. KANODIA ETC. ETC. v. A.L.MUTHU (D) THR.         571
                    LRS.
2nd and 3rd properties, the Rent Controller fixed the rent   A
after taking into consideration the market value of the
land @ Rs.50 lakhs per ground. The appellate authority
fixed the rent on the basis of valuation of the land @
Rs.65 lakhs per ground. The High Court dismissed the
~evision petitions of the tenants.                           B

    In the instant appeals, it was contended for the
appellants-tenants that the valuation of land as was
determined in respect of 1st property @ Rs.25/- lakhs per
ground should have been taken into consideration for
determination of the fair rent.                           C

    Allowing the appeals in part, the Court

     HELD: 1.1 From the principles set out in sub-ss. (2)
to (4) of s.4 of the Tamil Nadu Buildings Lease and Rent 0
(Control) Act, 1960, it is apparent that market value of the
site on which the building is constructed is an important
factor to be taken into consideration for fixing the fair rent
of the building. [para 14] [579-D]

     1.2 The two rented premises, which are the subject E
matter of the instant appeals, are situated in the building
adjacent to the 1st property, in respect of which the Rent
Controller (small Causes Court) determined the market
fair rent on accepting the market value of the. land at
Rs.25 lakhs per ground. Against the said judgment, F
appeals have been preferred by both the appellant-
tenants and the respondents-landlords but no order of
stay has been passed by the appellate authority and the
matter is still pending. The mere fact that the appeals filed
by the appellants and the respondents remain pending G
for disposal for more than 8 years and during the
pendency the respondents-landlords filed two petitions
u/s 4 of the Tamil Nadu Buildings Lease and Rent (Control)
Act, 1960, before the Rent Controller, cannot be made a
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    572     SUPREME COURT REPORTS                [2012] 6 S.C.R.


A ground to deprive the appellants-tenants of their
  legitimate right to rely on a market value of adjacent land
  already determined by the Rent Controller. Even if the
  appeals are dismissed by the appellate authority, the
  market value of the adjacent land as determined will
B remain Rs. 25 lakhs per ground. In the cases in hand, it
  was not open to the appellate authority to ignore the
  market value of the adjacent land already determined on
  the ground of pendency of an appeal. The High Court
  failed to appreciate this fact though it was a fit case for
c interference under Art. 227 of the Constitution of India.
  [para 15] [579-E-H; 580-A-C]

       1.3 The impugned judgments of the appellate
  authority dated 14.10.2006 as affirmed by the High Court,
  to the extent they relate to "market value of the land", are
D set aside. The appeals are remitted to the appellate
  authority for determination of limited issue relating to the
  market value of the land on which the building premises
  are situated, taking into consideration the evidence on
  record including Ext.A-4, Ext.A-9 and the market value of
E the adjacent land as was determined by the Rent
  Controller in RCOP No. 1046 of 1994, etc. [para 16] [580-
    C-F]
       2. The findings of the appellate authority with respect
F to 'classification of building', 'depreciation', 'plinth area',
  'construction charges' and of basic amenities of the
  petition building as affirmed by the High Court are
  upheld. [para 17] [580-G]

      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
G 5218-22 of 2012.

        From the Judgment & Order dated 28.04.2008 of the High
    Court of Judicature at Madras in Civil Revision Petition Nos.
    323, 324, 615, 616 & 3347 of 2007.
H
  V.S. KANODIA ETC. ETC. v. A.L.MUTHU (D) THR.               573
                     LRS.
    Siddharth Bhatnagar, Pratik Jalan, Pavan Kr. Bansal, T.         A
Mahipal for the Appellant.

    K. Ramamurthi, P.B. Balaji, A.T.M. Sampath for the
Respondents.

    The Judgment of the Court was delivered by                       B

     SUDHANSU JYOTI MUKHOPADHAYA, J. 1. Leave
granted. These appeals have been preferred against a
common order dated 28th April, 2008 passed by High Court
of Judicature at Madras wher~by Revision Petition Nos. 323, C
324, 615, 616 and 3347 of 2007 preferred by appellant were
dismissed.

     2. The appellants are tenant whereas respondents are the
landlord of tenanted building. Initially, the dispute related to non-
                                                                      0
residential premises situated in Chennai, namely, (i) 2nd and
3rd floors of the building at D.No.23, TIK Road, (Mowbray's
Road), Chennai, (hereinafter referred to as 1st property) (ii) 2nd
floor of the front and rear building at 22, TIK Road, (Mowbray's
Road), Chennai-18 (hereinafter referred to as the 2nd property)
and (iii) ground floor of the front and rear and 1st floor rear of E
the building at 22, TTK Road, (Mowbray's Road), Chennai-18
(hereinafter referred to as the 3rd property) but in these
appeals, we are concerned with the rent fixed in respect to 2nd
and 3rd property situated at 22, TIK Road, (Mowbray's Road),
Chenna~18                                                             F

     3. In respect of 1st property at D.No.23, TTK Road,
Chennai, the contractual rent was Rs. 6210/- per month, which
was increased to Rs. 18,847/- by an order passed by Small
Causes Court, Chennai on 28.6.1996 in RCOP NO.; 1046 of G
1994 in a petition filed by respondent-landlord under Section
4 of the Tamil Nadu Buildings Lease and Rent (Control) Act,
1960 (hereinafter referred to ~s the Act). In the said case, for
determination of fair rent, market value of the land was
assessed @ Rs.25 lakhs per ground. The appellant-tenant has H
    574     SUPREME COURT REPORTS                 [2012) 6 S.C.R.

A   preferred an appeal against the said order in RCA No. 557/
    2004 and another appeal has been prefe.rred by respondent-
    landlord in RCA No. 1196/1996 before the Rent Control
    Appellate Authority (Small Causes Court) Chennai.

        4. In respect of 2nd and 3rd property situated at 22, TTK
8
  Road, Chennai-18, the respondent-landlord filed two separate
  petitions under Section 4 of the Act for fixing the monthly rent
  of respective portions, registered as RCOP No. 1176 and
  117711997. After hearing the parties, those petitions were
C determined by Rent Controller by a common judgment and
  decree dated 28.9.2004 whereby fair monthly rent of the
  properties were fixed at Rs. 46,422/- and Rs.95,220/-
  respectively, after taking into consideration the market value of
  land @ Rs.SO lakhs per ground.

D      5. Against the aforesaid common judgment, both the
   respondent-landlord and appellant-tenant preferred appeals in
   RCA No. 1393, 1394, 1404 and 1405 of 2004. After taking into
  consideration the relevant evidence and submission of parties,
  by a common order and judgment dated 14.10.2006 the
E appellate authority, (8th Judge) Small Causes Court, Chennai
  fixed the monthly rent at Rs. 58,329/- and Rs. 1,21,877/-
  respectively, allowing the appeal preferred by landlord and
  dismissing the appeals preferred by tenant. The rent was fixed
  on the basis of valuation of land @ Rs.65 lakhs per ground.
F Against the aforesaid order, the Revision petitions preferred
  by appellant-tenant were dismissed by the impugned common
  judgment dated 28.4. 2008.

       6. Before the Courts below, the respondent-landlord took
  plea that the appellant-tenant had been on the front portion of
G the ground floor for 43 years and in the rear side portion of the
  ground floor and also at the rear side portion of the 1st floor
  and rear side portion of the 2nd floor for the past 17 years and
  in the front portion for the past 16 years. The petition building
  comes under Class I building with R.C.C. roofing and all the
H three basic amenities are available. The plinth area of the front
  V.S. KANODIA ETC. ETC. v. A.L.MUTHU (D) THR.                 575
   LRS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]

portion of the ground floor is 1719 sq. ft., and the rear portion      A
is 1766 sq. ft. and the lumber portion is 341 sq. ft., latrine
portion is 136 sq.ft., G.I. Sheet portion is 300 sq. ft. and on the
1st floor rear side portion is 1766 sq. ft., Latrine portion is 121
sq. ft. and on the 2nd floor the front portion is 1800 sq. ft. and
the rear portion is 1766 sq. ft. and that the plinth area of the       B
latrine portion is 121 sq. ft .. Furthermore, the petition building
is situated at a very important and busy business area being
Mylapore and, therefore, the value of the ground site per ground
will be Rs.75 lakhs. Hence, prayer was made to fix the monthly
fair rent of the petition building at Rs.77,706 and Rs.1,54,126        c
respectively.

       7. The appellant-tenant on appearance, denied that the
 petition building is a Class I building and also denied the age
 of the building as mentioned by the respondent-landlord.
 According to them, age. of the petition building as per their         D
·engineer was more than 55 years; and the measurement of
 basic amenities as shown in the petition were also incorrect.
 They alleged that basic amenities were not available in the
 petition building as was claimed by the landlord. The value of
 the ground site mentioned in the petition was also disputed as        E
 excessive. According to them, the petition building is situated
 in Bishop Wailers Avenue, therefore, the value of the ground
 site cannot exceed Rs.10 lakh per ground. Hence, it was
 submitted that the monthly fair calculated in the petition was very
 excessive and, therefore, the petition under Section 4 of the Act     F
 be dismissed.

     8. The Rent Controller as wall as Appellate Authority after
hearing the ·parties decided the disputes relating to
'Classification of building', 'Plinth area', 'Construction charges',   G
'Value of the ground site' and ,'Basic amenities'. There is a
concurrent findings that the petition building is a Class-I building
and the age of the petition building being 16, 17 and 45 years
respectively, therefore, the depreciation was calculated at 1 per
cent for 16, 17 and 45 years. The plinth area was accepted as          H
    576      SUPREME COURT REPORTS                   [2012] 6 S.C.R.


A  mentioned by the engineers on behalf of the landlord for the
   purpose of determination of fair rent. Similarly, there is a
   concurrent findings with regard to construction charges and
  .basic amenities. The engineers of both the parties had admitted
   that all three basic amenities were available in the petition
B building and accordingly the engineers for the landlord had fixed
   at 20 per cent and the engjneers for the tenant had allotted 1O
   per cent but the trial court and the Appellate Authority accepted
   15 per cent for determination of basic amenities.

         9. So far as "value of the ground site" is concerned, parties
C   exhibited their respective evidence which were noticed by Rent
     Controller and the Appellate Authority. The respondent-landlord
     produced the evidence to claim the value of the ground site at
     more than 1 crore per ground and in support of which a sale
    deed No. 99/88 dated 9.12.97 pertaining to door no. 241/1,
D   T.T.K. Road Extention.~.Ambujammal Street, Alwarpet, Chennai-
     18 was filed as Exhibit A4. It was also brought to the notice of
    the Authority that an extent of 470 sq. ft. of land had been sold
    for Rs. 14,00,000/- and on that basis the value per ground is
     Rs.71,48,936/- and that the petition mentioned building is
E   situated very near to Radhakrishnan Road but the property
    pertaining to Exhibit A4 is situated at a distance of 2 and %
    furlong from the petition mentioned building and, therefore, in
    the classification report Exhibit A9, the ground site per ground
    had been calculated at Rs.1 crore. The R.W.2, engineer on
F   behalf of the tenant in his Examination in Chief had mentioned
    that the ground site where the petition mentioned building is
    situated is not owned by the Petitioner as conveyed by the
    tenant and, therefore, for the calculation of the monthly fair rent ·
    the value of the ground site had not been taken into account,
G   no sale document had been filed on behalf of the tenant. The
    R.W.2, in his cross examination had mentioned that the petition
    mentioned building is situated on the TTK Road and near the
    junction of Cathedral Road and Radhakrishnan Road. There is
    a Church near the petition mentioned building and 'Woodland
H   Hotel' is situated at a distance of 1 and % furlongs from the
 V.S. KANODIA ETC. ETC. v. A.L.MUTHU (D) THR.                577
  LRS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
petition mentioned building and opposite to it there is a hotel      A
known as 'Mowbrays Inn'. Further, on the opposite site of the
'Woodland Hotel', St. Abbas School is situated. The Nilgiris
Supermarket is situated at a little distance from it and a Music
Academy is also there near the petition mentioned property. It
was further mentioned that no document had been perused for          B
the valuation of the ground site. Hence, the argument advanced
that the petition mentioned building is situated on the T.T.K.
main road but the entrance pertaining to the tenant is through
the Biship lane was not accepted both by the Rent Controller
 and the Appellate Authority.                                        c
     10. On behalf of the appellant-tenant, it was brought to the
notice of both the Rent Controller and the Appellate Authority
that another petition under Section 4 was filed by respondent-
landlord against the appellant-tenant for fixation of monthly fair
rent pertaining to 1st property situated adjacent to the disputed    D
2nd and 3rd property. In the said case, the rent has been fixed
taking into consideration the valuation of rent @ Rs.25 lakhs
per ground. Therefore, it was pleaded that same valuation
should be taken for determination of the present cases. The
Appellate Authority refused to notice the valuation as               E
determined in respect of 1st property with following observation:

     "Since it had been admitted by both the parties that the
     appeal filed against the aforesaid order is still pending and
     in such a circumstance since it cannot be considered that       F
     the aforesaid order had reached the final stage and,
     therefore, the trial court having decided that it will not be
     justifiable to take into account the aforesaid valuation
     seems to be correct and decided accordingly."

     11. In this case, the main grievance of the appellant-tenant    G
is that the valuation of land as was determined in respect of
1st property @ Rs.25/- lakhs per ground but same has not been
taken into consideration for determination of the fair rent of the
petition building.
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    578      SUPREME COURT REPORTS                   [2012) 6 S.C.R.


A        12. Per contra, according to learned counsel for the
    respondent-landlord, the Appellate Authority has determined the
    market value of the land @ Rs.65 lakhs per ground taking into
    consideration the classification report, Exhibit A-9, Exhibit A-
    4, etc., which are the recent market value and, therefore, the
B   High Court rightly refused to sit in appeal over a finding of fact.

        13. We have heard learned counsel for the parties and
    perused .the record.

          14. Section 4 of the Act reads as under:
c
          "4. Fixation of Fair Rent. -

          (1) The Controller shall on application 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
D         accordance with the principles set out in the following sub-
          sections:

          (2) The fair rent for any residential building shall be nine
          per cent gross return per annum on the total cost of such
E         building.

          (3) The frir rent for any non-residential building shall be
          twelve per cent gross return per annum on the total cost
          of such building.
F         (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
          of the building and the cost of provision of anyone or more
          of the amenities specified in schedule 1 as on the date of
G         application for fixation of fair rent.

                 Provided that while calculating the market value of
                 the site in which the building is constructed, the
                 Controller shall take into account only that portion
                 of the site on which the building is constructed and
H
 V.S. KANODIA ETC. ETC. v. A.L.MUTHU (D) THR.                  579
  LRS. [SUDHANSU JYOTI MUKHOPADHAYA, J.]
            of a portion upto fifty per cent, thereof of the vacant    A
            land, if any, appurtenant to such building the excess
            portion of the vacant land, being treated as amenity;

            Provided further that the cost of provision of
            amenities specified in Schedule 1 shall not exceed-
                                                                       8
     (i)    in the case of any residential building, fifteen per
            cent; and

     (ii)   in the case of any non-residential building, twenty-
            five per cent, of the cost of site in which the building   c
            is constructed and the cost of construction of the
            building as determined under this section."

     From the principles set out in sub-Sections (2) to (4) of
Section 4 it is apparent that market value of the site on which
the building is constructed is an important factor to be taken         D
into consideration for fixing the fair rent of the building.

      15. Reverting to the facts of this case, we find that the
ap'pellants are tenant of three premises of which the
respondents are the landlords. Out of the three premises, the          E
first premises is a non-residential building constructed on land
bearing D.No.23, T.T.K. Road, Chennai relating to which fair
rent has already been determined by the Rent Controller in
RCOP NO. 1046of1994. In the said case, the Rent Controller
(Small Causes Court), Chennai by judgment dated 28.6.1996              F
determined the market fair rent on accepting the market value
of the land at Rs.25 lakhs per ground. Against the said
judgment, appeals have been preferred by both the appellant-
tenants and th'~ respondent-landlords but no order of stay has
been passed by the appellate authority; matter is still pending.       G
With regard t~ rest two rented premises, the building are
situated ori the adjacent land bearing D.No. 22, TTK Road,
ehennai,which are the subject matter of dispute. The mere fact
that the appe~I filed by appellants and respondents remain
 pendin~ffor dlsposal for more than 8 years and during the             H
               I
    580       SUPREME COURT REPORTS                    [2012] 6 S.C.R.


A pendency the respondent-landlord filed two petitions under
  Section 4 of the Act before the Rent Controller, cannot be made
  a ground to deprive the appellants-tenants of their legitimate
  right to rely on a market value of adjacent land (D.No. 23, TTK
  Road, Chennai) already determined by the Rent Controller.
B Even if the appeals are dismissed by the appellate authority,
  the market value of the adjacent land as determined will remain
  Rs. 25 lakhs per ground. In the cases in hand, it was not open
  to the appellate authority to ignore the market value of the
  adjacent land already determined on the ground of pendency
c of an appeal. The High Court failed to appreciate the aforesaid
  fact though it was a fit case for the High Court to interfere under
  Article 227 of the Constitution of India.

       16. In the result, the appeals are allowed in part; the
  impugned judgments of the Appellate Authority dated
D 14.10.2006 as affirmed by the High Court, so far as it relates
  to "market value of the land" is concerned, are set aside;
  Appeals, RCOP No. 1393, 1394, 1404 and 1405 of 2004 are
  remitted to the appellate authority (learned Vlllth Judge, Court
  of 'Small Causes Court', Chennai) for determination of limited
E issue relating to the market value of the land on which the
  building premises is situated (D.No. 22, TTK Road, Chennai-
  18) taking into consideration the evidence on record including
  Exh.A-4, Exh.A-9 and the market value of the adjacent land as
  was determined by the Rent Controller in RCOP No. 1046 of
F 1994, etc., preferably within six months.

       17. So far as the findings of the appellate authority with
  respect to 'classification of building', 'depreciation', 'plinth area',
  'construction charges' and of basic amenities of the petition
G building as affirmed by the High Court are not interfered with
  by this Court and they are upheld. There shall be no order as
  to costs.

    RP.                                      Appeals partly allowed.