Mehar Singh, C.J. - (1.) There is a locality as Pacca Bagh on the outskirts of Jullundur City. In the twelve months preceding Jan. 1, 1939, and thereafter, there have been some residential houses in that area, but the area on which since 1954-55 a flourishing commercial locality has come into existence, known as Connaught Place, was between the years 1938 and 1954 used for agricultural purposes.
(2.) The demised premises are the property of Vijay Singh and were let by him to Pushkar Mani by a rent note of March 15, 1961, at a rental of Rs. 100.00 per mensem. The parties are not agreed whether the demised premises were let for residential purposes or non-residential purposes, the landlord saying that the same were let for residential purpose and the tenant saying that the same were let for non-residential purposes, that is to say, for running a school. The counsel are agreed that in the rent note itself the purpose of letting is not given. Ordinarily, in such circumstances, the nature of the locality would decide the purpose for which the letting has come into existence, except for this that when a landlord lets his premises without defining the purpose for which he does so, he probably does not care for the purpose at all and the tenant may be using the same for residential as also for non-residential purpose, in which case the premises will be taken to have been let as a residential building according to Sec. 2(g), and far a non-residential building according to Sec. 2(d) when it is used solely for purposes of business or trade. The reference is to the provisions of the East Punjab Urban Rent Restriction Act, 1949 (East Punjab Act 3 of 1949).
(3.) An application was moved by the tenant under Sec. 4 of the Act for fixation of fair rent. Both the Rent Controller and the Appellate Authority have relied upon Chanan Singh Vs. Sewa Ram, 1966 P.L.R 335, to come to the conclusion that the provisions of sub-section (2) of Sec. 4 of the Act cannot strictly be attracted to a case like this where the character of the locality has changed from agriculture land to commercial locality as compared to the year 1938-39 and by the time the demised premises came to be let to the tenant. In the circumstances the Rent Controller was faced with the duty of fixing fair rent. What he did was that he took the evidence of the tenant with regard to residential buildings in the tenancy of two occupants in Pacca Bagh somewhere near the commercial locality of Connaught Place, and found that between 1938-1939 and the time he was disposing of the tenant's application for fixation of fair rent on July 25, 1966, there had been increase of one fifth of the rent. So he came to this conclusion that the rents during the twelve months prior to Jan. 1, 1939, in the locality, for residential buildings, were 20 per cent less than the rents of the same buildings about the year 1960 when the demised premises were let by the landlord to the tenant. He therefore, proceeded to reduce the contractual rent of Rs. 100.00 between the parties by that ratio and arrived at the figure of Rs. 83.00 per mensem as the basic rent for the demised premises in the twelve months prior to Jan. 1, 1939. Having arrived at that conclusion the Rent Controller refused to proceed under the remaining sub-sections of Sec. 4 of the Act to allow statutory increase on the basic rent to the landlord. Now, the basic rent having been found by the Rent Controller to be Rs. 83.00 per mensem, if the demised premises were treated as residential building and as the same had been constructed after Jan. 1, 1939, according to Sec. 4(3)(ii)(c) the statutory increase on the basic rent could go up to 50 per cent, and if the demised premises were taken as non-residential building, then according to Sec. 4(5)(ii)(b) the statutory increase on the basic rent could go up to 100 percent. The Rent Controller refused to allow any statutory increase on the basic rent that he fixed in this case saying that he was not doing so because of the peculiar circumstances of this case, without explaining what the circumstances are and with out pointing out the peculiarity or the circumstances. In appeal the appellate Authority has affirmed the order of the Rent Controller, although both the Landlord and the tenant had filed appeals before it against the order of the Rent Controller, the Appellate Authority's order being of Aug. 16, 1967. Against that order of the Appellate Authority both the parties have now come in revision to this Court.;