LIZA ARULANADAM Vs. A S SULOCHANA
SUPREME COURT OF INDIA (FROM: MADRAS)
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(1.)The appellant/ tenant is in occupation of a double storeyed building bearing No. 100, Aiya Mudali Street, 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, or short 'the Act'. The Rent Controller fixed the fair rent at Rs. 1,000/-per month. On appeal, the Court of Small Causes, Madras and on further Revision under Sec. 25, the Madras High Court confirmed the order. This appeal by special leave has been at the behest of the tenant. The admitted facts are that 1/3rd 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 years' old. Section 4 of the Act provides the procedure for fixation of the fair rent, which reads thus:
"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 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 building.
(3) The fair rent for any non-residential building shall be 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 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-
(i) in the case of any residential building, fifteen per cent; and
(ii) in the case of, non-residential building, twentyfive per cent, of the cost of site in which the building is constructed and the cost of construction of the building as determined under this Section."
"5. (a) The cost of construction of the building including cost of internal water supply, sanitary and electrical installations 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 disallow an amount not exceeding thirty pet cent of construction having regard to the nature of the building.
(b) The Controller shall deduct from the cost of construction determined in the manner specified in clause (a), depreciation, calculated at the rates specified in Schedule II."
(2.)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 building 12 per cent gross return per annum on the total cost of the building in question. The total 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; and (c) the cost of provision of any one or more of the amenities specified in Schedule I which shall not exceed: (1) in the case of residential building 15 percent; 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 building would also include internal water supply, sanitary and electrical installations. The estimation of its ratio thereof shall be as is done by the Public Works Department of the Government for the area concerned. In addition to the above, having regard to the nature of the building, the Controller may, in appropriate cases, allow or disallow an amount not exceeding 30% of construction. The Controller shall also deduct from the cost of construction determined in the manner specified in clause (a) of subsection 5 of Sec. (4) the depreciation calculated at the rates specified in 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.
(3.)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 are presently not concerned. An Engineer was appointed as a Commissioner 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 buildings 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 sq. metre. The parties also adduced oral evidence. The Rent Controller after consideration thereof fixed the rates as afore-stated and he worked out the fair rent on that basis.
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