IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 22ND JULY 2010 / 31ST ASHADHA 1932 RCRev..No. 140 of 2010() ------------------------ RCA.76/2005 of VI ADDL. RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM OS.1628/2001 of I ADDL. MUNSIFF COURT.,ERNAKULAM .................... REVISION PETITIONERS/APPELLANTS/DEFENDANTS ------------------------------ 1. M/S.MIDLAND TRADERS, ELIAS TOWERS, BANERJI ROAD, KOCHI-18. 2. A.LEELA, W/O.LATE KRISHNAN, AGED 75YEARS M/S.MIDLAND TRADERS, BANERJI ROAD, KOCHI-18. 3. USHA,D/O.LATE KRISHNAN, AGED 50 YEARS, M/S.MIDLAND TRADERS, BANERJI ROAD, KOCHI-18. 4. JAYA,D/O.LATE KRISHNAN,AGED 44YEARS, M/S.MIDLAND TRADERS, BANERJI ROAD,KOCHI-18. BY ADV. SRI.B.G.BHASKAR SRI.BIJU ABRAHAM RESPONDENT(S)/RESPONDENTS/PLAINTIFFS: --------------- 1. MIRIAM ELIAS, W/O.LATE BASIL ELIAS, AGED 56 YEARS, 36/1-6,KOTTECANAL RAOD,ERNAKULAM.KOCHI-18. 2. SMITHA ELIAS, D/O.LATE BASIL ELIAS, AGED 31YEARS,36/106,KOTTECANAL ROAD, ERNAKULAM,KOCHI-18. 3. DAN ELIAS, S/O.LATE BASIL ELIAS, AGED 27 YEARS,36/106,KOTTECANAL ROAD, ERNAKULAM,KOCHI-18. ADV. SRI.MEIJO KURIAN PUVATHINGAL FOR R1-3 SRI.K.V.JAYADEEP MENON FOR R1-3 SMT.P.KRISHNAPRIYA FOR R1-3 THIS RENT CONTROL REVISION HAVING COME UP FOR ADMISSION ON 22/07/2010, ALONG WITH RCR NO. 141 OF 2010 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ORDER ON IA.1831 OF 2010 IN RCR. 140/10 DISMISSED. SD/- PIUS C.KURIAKOSE, JUDGE. 22-7-10 SD/- C.K.ABDUL REHIM, JUDGE. (TRUE COPY) PS TO JUDGE. PIUS C. KURIAKOSE & C.K.ABDUL REHIM, JJ. ----------------------------------------------- RCR. No. 140 & 141 of 2010 ----------------------------------------------- Dated this the 22nd day of July, 2010 O R D E R Pius C.Kuriakose, J. Under challenge in these revisions filed by the tenant/a partnership firm under Section 20 of Act 2 of 1965 is the common judgment delivered by the Rent Control Appellate Authority in an appeal which was filed by the tenant and memorandum of cross objections filed by the landlord against an order of the Rent Control Court fixing fair rent for the building under Section 5 of Act 2 of 1965. The building is situated evidently in a commercially very important locality in Cochin city admittedly near to the Kerala High Court and the prestigious Cochin Marine Drive. The building abuts the Banerjee Road as well as the market road. The building is a portion of the ground floor of a four storied commercial complex by name “Elias Chambers”. Portions of the upper stories of the above commercial RCR. Nos. 140 & 141 of 2010 -2- complex are occupied by various other tenants including the Life Insurance Corporation of India and South Indian Bank Ltd. The revision petitioners who are doing business in the petition schedule premises in the ground floor of the building took the building on lease in 1981 on a monthly rental of Rs.1,000/-. The original landlords initiated the proceedings in the year 2001 by instituting a suit for fixation of fair rent before the Munsiff's Court and the suit was decreed. The judgment of this Court in George v. State of Kerala (2000(2) KLT 933) was relied on by the tenants. The suit was tried by the learned Munsiff and at trial the evidence consisted of Exts.A1 and A2, B1 to B4, C1 commission report, Exts.X1 to X4 produced by witnesses, oral evidence of witnesses PWs.1 to 3 on the side of the plaintiff/landlord and the oral evidence of DW1 on behalf of the tenant/ defendant. It came on record from the evidence of PW2/a senior officer of the South Indian Bank, tenant in occupation of the first floor and that of PW3/a senior officer RCR. Nos. 140 & 141 of 2010 -3- of LIC, tenant in occupation of second and third floor that LIC was paying rent at the rate of 11.70 sq. ft. even for the third floor premises and that the South Indian Bank is paying rent at the rate of 10.50 sq. ft. for the first floor premises occupied by them in Elias Chambers itself. The learned Munsiff on evaluating the evidence came to the conclusion that “present rate of rent available in the locality is between 10.50 and 11.70 sq. ft”. After concluding so the learned Munsiff would fix the fair rent for the building in question at Rs.12 per sq. ft. and the rent for the entire premises at Rs.3,840/- per mensem. 2. The tenant preferred appeal to the District Court as AS. No. 364 of 2003 against the judgment and decree passed by the Munsiff's Court which was transferred by the District Court to the Rent Control Appellate Authority on the basis of the judgment of this Court in Edger Ferus v.Abraham Ittycheria, 2004(1) KLT 767. Upon transfer, the Appellate Authority renumbered the appeal as RCA. No. 76 RCR. Nos. 140 & 141 of 2010 -4- of 2005. In that appeal the landlord submitted a memorandum of cross objection contending that the fair rent should have been fixed at the rate of Rs.25/- to Rs.30/- per sq. ft. The Rent Control Appellate Authority under the impugned judgment dismissed the appeal preferred by the tenant and upheld the memorandum of cross objections and fixed the fair rent of the building at the rate of Rs.8000/- per mensem (Rs.25/- per sq. ft.) with effect from the date of institution of the suit. 3. In the separate revision filed by the tenant against the decision on his appeal and the landlord's memorandum of cross objections the tenant urges that the parameters fixed by this court by judgment in Aboobacker v. Vasu, 2003 (3) KLT 1029 on the basis of the judgment in Issac Ninan v. State of Kerala, 1995 (2) KLT 848 are unreasonable and opposed to public policy. It is urged that the judgment of this Court in Issac Ninan v. State of Kerala, 1995(2) KLT 848 so far as it relates to Sections 5(2) and 8(1) of Act 2 of RCR. Nos. 140 & 141 of 2010 -5- 1965 has been rendered per incuriam as a binding judgment rendered by a Full Bench reported in Kunhammad Keyi v. Premalatha, 1962 KLT 366 (FB) was ignored by this Court. It is submitted that the Division Benches which decided 2000 (2) KLT 993 and 2003(3) KLT 1029(Aboobacker v. Vasu) fell into error as the Benches were under the compulsion of conviction that 1962 KLT 366 (FB) (Kunhammad Keyi v. Premalatha) no longer held the field in view of 1995(2) KLT 848 (Issac Ninan v. State of Kerala). It is also urged that this Court while restoring Section 5(1) to the statute by judgment in Edger Ferus v. Abraham Ittycheria, 2004(1) KLT 767 had adopted the parameters/norms prescribed by the judgments in 2000(2) KLT 993 and 2003(3) KLT 1029 as these parameters are illegal being opposed to sub-section (2) of Section 5 of the Act which were approved by the Full Bench in 1962 KLT 366. 4. It is urged that even if it is accepted for argument sake that the guidelines followed by the lower appellate RCR. Nos. 140 & 141 of 2010 -6- court for fixing the fair rent are valid and binding, then also the evidence available in the case falls short of fixing fair rent at the rates presently re-fixed. It is pointed out that the landlord had not directly assailed the judgment of the trial court, but had filed only a memorandum of cross objections. 5. Extensive submissions were addressed before us by Sri.Biju Abraham, learned counsel for the revision petitioner and by Sri.K.V.Jayadeep Menon, learned counsel for the respondents. Sri.Biju Abraham drew our attention to the judgment in George v. State of Kerala, 2000(2) KLT 933, Aboobacker v. Vasu, 2003(3) KLT 1029 and Edger Ferus v. Abraham Ittycheria, 2004(1) KLT 767. He drew our attention also to the judgment of the Full Bench in Kunhammad Keyi v. Premalatha, 1962 KLT 366 (F.B). He argued that as 1995(2) KLT 848 (Issac Ninan v. State of Kerala) was rendered ignoring the Full Bench judgment in Kunhammad Keyi v. Premalatha, 1962 KLT 366, the same RCR. Nos. 140 & 141 of 2010 -7- was rendered per incuriam and the subsequent decisions which are all given as equals of the judgment in Issac Ninan v. State of Kerala 1995(2) KLT 848 cannot be considered as laying down good law. Mr. Biju Abraham argued that even if the guidelines formulated by this Court in Edger Ferus v. Abraham Ittycheria, 2004 (1) KLT 767 are considered to be binding, then also there was no evidence before the statutory authorities in this case on the basis of which the above guidelines could be followed and fair rent that the present rate of Rs.8000/- per mensem could be fixed. According to him, no evidence regarding the rent prevailing in the locality was adduced by the landlord. The evidence adduced by the landlord was only regarding the rent paid by his own tenants occupying the first, second and third floors of the very same building. Mr. Biju Abraham submitted that at any rate fixation of rent at a rate higher than the rate fixed by the trial court is not justifiable. The learned counsel submitted that it is important to notice that the RCR. Nos. 140 & 141 of 2010 -8- landlord did not think in terms of preferring a separate appeal, which means that the landlord had no grievance about the fixation done by the trial court and that had it not been for the appeal preferred by the tenant landlord would have willingly received the rate fixed by the trial court as fair rent. Mr. Biju Abraham submitted further that at any rate, retrospectivity given to the order from the date of institution of the suit in 2001 is illegal and is resulting in extreme hardship to the tenant. 6. All the submissions of Mr. Biju Abraham were resisted by Mr.Jayadeep Menon who pointed out at the very outset that the conditions imposed by this Court while granting stay as per order in IA. No. 1320 of 2010 was not complied with at all by the tenant. The learned counsel drew our attention to the judgment of the civil court as well as that of the Appellate Authority and submitted that the findings entered therein regarding the fair rent were correct findings based on evidence. PWs. 2 and 3 were none other RCR. Nos. 140 & 141 of 2010 -9- than the tenants in occupation of the first and upper floors of the very same building and hence most competent witnesses to speak about the rent which the petition schedule building, the ground floor portion with commercial potentiality, will fetch. The learned counsel took us through the oral evidence adduced by PWs. 1 to 3 and DW-1. 7. We have very anxiously considered the rival submissions and we have examined the ratio of the various decisions to which our attention was drawn by the learned counsel for the revision petitioner. The argument of Mr.Biju Abraham that the judgment of Division Bench of this Court in Issac Ninan v. State of Kerala, 1995(2) KLT 848 was rendered per incuriam as the same had not considered the impact of the judgment of the Full Bench in Kunhammad Keyi v. Premalatha, 1962 KLT 366 and the further argument that the pronouncements of the Division Bench in 2000(2) KLT 993, 2003(3) KLT 1029 (Aboobacker v. Vasu) and lastly in 2004 (1) KLT 767 (Edger Ferus v.Abraham Ittycheria) RCR. Nos. 140 & 141 of 2010 -10- rendered on the assumption that 1995(2) KLT 848 (Issac Ninan v. State of Kerala) is good law are also bad, are too tumultuous arguments to receive acceptance at our hands. It is true that in Kunhammad Keyi v. Premalatha (1962 (3) KLT 366), the Full Bench after observing that the municipal assessment is a fair and ready means of discovering what is reasonable rent for a building at any particular point of time has overruled the contention that fixing fair rent on the basis of an order made by the executive authority (the Municipality) amounts to deprivation of property offending Article 19(1)(F) and 31 of the Constitution. But we notice that in that case wherein the statutory authorities had fixed fair rent of their building at a rate lesser than what the landlords had sought for, there was no challenge against the vires of Section 5, 6 and 8 as such. The challenge in that case was only regarding the limits placed on the powers of the Rent Control Court in fixing the fair rent in view of the proviso to sub Section 2 of Section 5 which was to the effect RCR. Nos. 140 & 141 of 2010 -11- that the fair rent shall not exceed by more than 15% of the monthly rent on the basis of which property tax has been fixed. The case of Issac Ninan v. State of Kerala (1995(2) KLT 848) was on the contrary, a case in which the constitutionality of Sections 5, 6 and 8 were challenged directly and this Court after finding that Sections 5, 6, and 8 operate as a package held that those sections do not strike a proper balance between the freedom guaranteed by Article 19(1)(g) and the social control permitted under clause-6 of Article 19 and amounted to gross violation of the constitutional rights of a landlord engaged in the business of constructing and letting out buildings. The Division Bench also held that the prohibition contained in Section 6 that no further increase in the fair rent fixed by the court will be permitted except in the only event of the landlord making any additional improvement or alterations to the building was an unreasonable restriction on the right to livelihood envisaged in Article 20(1) of the Constitution. On the RCR. Nos. 140 & 141 of 2010 -12- various reasons stated in the judgment it was held that the provisions which were impugned, do not stand the test of reasonableness and hence, the Bench declared the provisions put to together are ultra vires the constitution and hence void. It is reliably learnt that their Lordships of the Division Bench who decided Issac Ninan v. State of Kerala (1995(2) KLT 848) were assured by the Advocate General of the State who appeared before the Bench as requested by the court, that the Government will be bringing forth appropriate legislations to provide for fixation of fair rent taking into account all relevant inputs. But the above assurance was unfortunately not honoured and this resulted in a situation of aggrieved parties mostly landlords and occasionally tenants without a remedy for their grievance that the rent that they were receiving or paying was inadequate or excessive. Under such a situation many parties invoked the civil court's jurisdiction under Section 9 and filed regular suits. Questions arose whether the Civil RCR. Nos. 140 & 141 of 2010 -13- Court was competent to fix the fair rent. The judgment of the Division Bench in George v. State of Kerala (2000(2) KLT 933) was delivered holding that the Civil Court will have jurisdiction to fix the fair rent of a building to which the provisions of Act 2 of 1965 apply. The issue as to what all are the parameters on which the fair rent of a building can be fixed was never considered or decided in George v. State of Kerala (2000(2) KLT 933) with the result that different courts in the State were adopting various parameters and formulae for fixing fair rent. It was also noticed that a civil suit can never be a proper substitute for proceedings which were available to the parties under the erstwhile Section 5 of Act 2 of 1965 which provided quicker and cheaper remedy to the parties. This was the background in which this Court while considering Aboobacker v. Vasu (2003(3) KLT 1029) alerted the State regarding the necessity to bring forth comprehensive legislation and indicated that it will be ideal to confer fair rent fixation power on Rent RCR. Nos. 140 & 141 of 2010 -14- Control Courts themselves. But this Court was apprehensive that such a legislation will be slow to come and this was why this Court enunciated a few principles to govern the civil court while fixing fair rent of a given building. One of us (Pius C.Kuriakose, J.) was also a member of the Bench that considered Aboobacker v. Vasu. We had also clarified that the principles enunciated under paragraph 21 of Aboobacker v. Vasu (2003(3) KLT 1029) are only illustrative and not exhaustive. It was while so, that a review petition seeking review of the judgment in Issac Ninan v. State of Kerala (1995(2) KLT 848) came up for consideration along with two civil revision petitions titled Edger Ferus v. Abraham Ittycheria (2004(1) KLT 767). Issac Ninan, the octogenarian review petitioner was personally present before court while considering the R.P. and the civil revision petitions filed by Edger Ferus. It was submitted before the Bench by Issac Ninan's counsel in his presence that though this Court in 1995 (2) KLT 848 declared the law, Issac RCR. Nos. 140 & 141 of 2010 -15- Ninan's predicament in not getting relief despite clear declaration of law by this Court some nine years earlier was agonizing. The review petition was filed seeking restoration of Section 5(1) to the statute so that the Rent Control Court itself and not the Civil Court can provide remedy to similar litigants in the state who were said to be legion. This was how this Court came to review the judgment in Issac Ninan's case to the extent of restoring Section 5(1). In the judgment in Edger Ferus v. Abraham Ittycheria (2004(1) KLT 767) several guidelines for fixing the fair rent by the Rent Control Court have been laid down and significantly guideline No.10 provided in paragraph 14 is that the yearly rental value of the building at the time of filing application for fair rent may also be taken as a guiding factor along with others. This shows that in Edger Ferus v. Abraham Ittycheria (2004(1) KLT 767) decided by this Court, this Court had applied its mind on the question decided by the Full Bench in 1962 KLT 366. What is most important is that RCR. Nos. 140 & 141 of 2010 -16- the Judgment in Edger Ferus has been approved by the Supreme Court. It is too late in the day for the revision petitioner to contend that the statutory authorities erred in following the principles laid down by this Court in Edger Ferus's case (cited supra). 8. The question that survives now is whether the judgment of the Appellate Authority fixing the fair rent of the building in question at Rs.8,000/- per mensem calculating the same at Rs.25/- per sq. ft. can be approved. As there is divergence between the rates fixed by the trial court and the appellate authority we shall refer to the evidence. 9. The evidence consisted of Exts.A1 and A2, oral evidence of PWs.1 to 3, Exts.P1 to P4, apart from Ext.C1 Commission Report and documents Exts.X1 to X4 produced by witnesses. One of the arguments which was seriously addressed before us by Sri.Biju Abraham was that the two witnesses examined on the side of the landlord are officers RCR. Nos. 140 & 141 of 2010 -17- of tenants in occupation of the upper floors of the very same larger building and no evidence has been adduced regarding the rent in respect of other buildings. We do not find much merit in the above argument. In our opinion, evidence regarding the rent fetched by the upper floors of the very same building will have more relevance on the issue. The statutory authorities found on the basis of the evidence on record that the building in question was situated in commercially one of the most important locality of the Cochin city. It was found that the building was having special locational advantages, in that it was enjoying the frontage of Banerji Road, one of the most important thoroughfares of the city, and also the market road, the one road on which there is maximum trading activity in the city. The building is situated on the junction where the Banerji Road and the market road meet at a point very near to the new building of the Kerala High Court. The petition schedule building is having a carpet area of 320 sq.ft in the RCR. Nos. 140 & 141 of 2010 -18- ground floor of a three storied commercial building. The building constructed in the year 1981 is undoubtedly has very high capital value and rental value. The statutory authorities found that the building was situated within the close quarters of the prestigious Cochin Marine Drive, town railway station, various educational institutions, hotels, restaurants and commercial establishments. The upper floors of the building are occupied by the South Indian Bank Ltd. and the Life Insurance Corporation of India. Unchallenged evidence was given by an officer of the South Indian Bank (PW2) that the Bank is paying rent for the first floor premises occupied by them at the rate of 10.50 per sq.ft. Similarly an officer of the Life Insurance Corporation of India, who are in occupation of the second floor of the building, gave convincing evidence that the Life Insurance Corporation of India is paying rent at the rate of 11.70 per sq.ft for the second floor occupied by them. It is a matter of common knowledge that premises in the ground floor, RCR. Nos. 140 & 141 of 2010 -19- providing easier access for customers and ideal for actual trading, will fetch much higher rent than premises in the upper floors, which may be better suited for office purposes and not for actual trading. According to us, the Rent Control Appellate Authority which under the statutory scheme is the final authority on facts, has appreciated the evidence correctly keeping in mind all inputs which are relevant for determining the fair rent of the building including the rent actually fetched by the first and second floors of the larger building consisting of the petition schedule building also, for fixing the fair rent of the building. At the same time, we feel that the actual fixation of fair rent by the learned Appellate Authority at the rate of Rs.25/- per sq.ft., the rate which was claimed by the landlord before the Rent Control Court, is slightly on the higher side. According to us, the fair rent of the petition schedule building, the second floor of which fetches actual rent of Rs.12/- per sq.ft, can be reasonably fixed at the rate RCR. Nos. 140 & 141 of 2010 -20- of Rs.22.50/- sq.ft. This means that the monthly fair rent of the building will have to be refixed at Rs.7200/- per month. It is so fixed. Under the impugned judgment, the learned Appellate authority has fixed the fair rent with effect from the date of the original suit. According to us, interests of justice will be served better if we say that the order fixing fair rent of the building at the rate of Rs.7,200/- per month will operate only with effect from 1/1/2004. 10. Accordingly, we dispose of both the revision petitions modifying the judgment of the Rent Control Appellate Authority and fixing the fair rent of the building in question at Rs.7,200/- per month to be operative from 1/1/2004. The parties are directed to suffer their respective costs in both the revision petitions. (PIUS C.KURIAKOSE, JUDGE) (C.K. ABDUL REHIM, JUDGE) ksv/kns/dpk-