HIGH COURT OF UTTARANCHAL AT NAINITAL Court’s order whether the case is or not approved for reporting Chapter VIII, Rule 32(2) (b) Description of case W.P. No. 7351 year 2001 (M/S) Stapal Singh and Inderpal Singh Versus State Bank of India and others A.F.R. (Approved for Reporting) ______________________________ Not approved for reporting Date of decision 13.10.2003 Initials of Judge HIGH COURT OF UTTARANCHAL AT NAINITAL Writ Petition No. 7351 of 2001 (M/S) (Old No.14495 of 1997) Satpal Singh and Inderpal Singh both sons of late Shri Kartar Singh Jointly carrying on business under the name and style of M/s Dalip Singh and Son of Shri Inderpal Singh by His constituted Attorney Shri Satpal Singh son of Late Shri Kartar Singh R/o 3, Lyotn Road, Dehradun ………….Petitioner Versus 1. State bank of India Constituted under the State Bank of India Act, 1955, service To be effected through the Chief Instructor, Staff Training Centre, 108-A, Hardwar Road, Dehradun. 2. Additional District Judge, special Judge, Dehradun. 3. Additional District Magistrate (Executive) Prescribed Authority Dehradun. ………..Respondents. Counsel for the petitioner Sh.K.N Josi and Narain Dutt (Advocate) Counsel for the respondent Sh. Ashish Kumar Joshi Dated: -13- 10-03 Hon’ble Rajesh Tandon J. By the present Writ petition under Article 226 of the Constitution of India, the petitioner have challenged the order passed by the Additional district Judge dated 14-10-96 passed in Rent Control Appeal No. 153 of 1995 between State Bank of India Vs. Satpal Singh and others. Background Facts Brief facts giving rise to the present Writ Petition are that the petitioner Landlord have filed the present application under Section 21(8) of U.P Act No.13 of 1992 in respect of Municipal No.98 Hardwar Road, Dehradun. It was stated by the petitioners that the respondent. Bank is a tenant of the premises comprising of an area of 10 Bighas at the rate Rs.3,750/- per month. The petitioner have stated that they are entitled for enhancement of 1/12 of the 10% of the market value of the building under tenancy. Prescribed Authority vide his order dated 19-07-96 has allowed the application and fixed the rent at the rate of Rs. 39,480/- per month. The respondent has preferred the appeal being appeal No.104 of 1996. Which was allowed by the appellate authority. Present writ petition has been filed against the appellate order allowing the appeal of the respondent, Bank. During the pendency of the appeal the respondent has also approached to the Hob’ble High Court on 7-10- 1996, Hon’ble High Court has directed the Bank to deposit the amount at the rate of Rs.10,000/- per month. I have heard the learned Counsel of the parties Sri S. N. Joshi appearing on behalf of the petitioner Sri Ashish kumar joshi appearing on behalf of the Bank and Standing Counsel for the authorities namely the respondent No2 and 3. On the rival contentions of the parties following points arise for consideration:- (1) Enhancement of Rent/market value of the property. (2) Applicability of section 2(g) of the Act to the pending proceedings. (3) Whether co-owner can maintain the proceedings. (4) Section 6992) of the partnership of Act. (1) Findings on Enhancement of rent/ market value of the property. The petitioners landlord have filed the application under section 21(8) of the Act sating therein to the following effect: “That O.Ps abovenamed are month to month tanent in premises bearing Municipal No.98, Hardwar Road, Dehradun, comprising an area of 10 bighes more 11 less(particularly described in the schedule hereunder at Rs.3,750/- per month, under the applicants.” “That the applicant have not moved any similar application for enhancement of rend during the past five years.” That in view, the huge amount of taxes and other liabilities which, through the liability of O.ps they refuse to honour, it is expedient in the interest of justice that the applicants are allowed to enhance the rent payable there for to a sum equivalent to 1/12th of 10% of the market value of the building under their tenancy from the commencement of the month of tenancy, following the date of application. It is, therefore, prayed that the monthly rent payable for the premises detailed in the scheduled he enhanced to 1/12th of 10% of the market value the building. Which comes to Rs. 39483 per month from the commencement of the month of tenancy following the date of application and grant such other relief or reliefs as this learned authority thinks fit and propes in the circumstances of the case.” In para- 11 of the writ petition the petitioner, have stated regarding the report from the govt. approved valuer who has mentioned the property to the tune of 47lack 38 thousand . Pargraphs-11,12 and 13 relates to the amendment of the valuation . the averments of the writ petition are quoted below:- Paragraph – 11 “That the petitioners obtained the said report from Government approved L.I.C. panal valuer M/s Arvind Architects whose licence No.CA/85/9268 and his valuer license No.CAT/1-3154. The measurements of the land and the buildings were taken by the aforesaid valuer who filed an affidavit as well as detailed report before the trial court, respondent No.3stating therein that on 9-1-90 the value of land and property No.98 Hardwar Raod, Dehradun, was Rs. 47,38,000/- and the present value as on 1-8-93 was Rs 58,90,000/-. A copy of the affidavit of the valuer is annexed and marked as Annexure ‘3’ to his writ petition. Paragraph-12 “That accordingly the petitioners filed an application for amendment through which the figures Rs.20,00,000/- was sought to be substituted by figure of Rs.47,38,000/- and figures of Rs.16,666=66 was sought to be substituted by figure of Rs.39483/-. A true copy of the said application is annexued and marked as Annexure ‘4’ to this writ petition.” Paragraph – 13 “ That after exchange of the objection trail court allowed the amendment vide order dated 30-6-1993.’’ Further in para- 24(i) and (ii) following averments have been made in the writ petition. the same are quoted below:- Paragraph 24-“(i) That while deciding the first point lower appellate court has held that the trial court has committed court has held that the trail court has committed error in assessing value of property on the report of the valuer, and has held the correct value of the property is for which the purchaser is agreeable to purchase the said property. Since there was negotiations for sale/purchase of the property in dispute between the parties for s.20,18,500/- and as such value of the property has wrongly been asserted and cannot be more than Rs.20,18,500/- (ii) That it is pertinent to mention that respondent No.1 the Bank, did not file any report of their valuer and complied with the orders of the learned trail court obviously because the same came to roughly to the same amount on the same basis. Paragraph 25- That the lower appellate court has ignored the fact that the application was moved on 9-11-1990 and the case was decided on 15-11-96 had the case been decided earlier the money would have doubled on the market value rate of interest respondent No.2disregarded the law as laid down in rulings reported in the following journals. (i) 1992(1) ARC 265 State of UP V. Additional District Judge, Saharanpur and others. (ii) AIR 1993 SC 1332 State of U.P and others V.s Additional District Judge and others (iii)1989(1) ARC 340 Central Bank of India and others V.II and (iv) 1992 (2) ARC 180 Smt. Padma Tandon Vdistrict Judge, Allahabad and others. (v) 1993 (2) ARC 89 State of UP and another V. Nirendra Nath Dixit and others (vi) 1989 (2) ARC 14 Assistant Commissioner of Sales Tax Bareilly and others Vs. Additional District Judge, Bareilly and others. (vii)43 (1991) Delhi Law Times 394 Nirmal Jit Arora Vs. Bharat Steel Tubes Ltd. For reasons which can only be surmised that stated. Facts as reported in 1987 ALR 308 are not similar to the facts hereinabove. Arguments in writing had been filed before the lower appellate court a true copy whereof is filed as Annexure-8 to this writ petition. The aforesaid paragraphs have been replied in the counter affidavit by the respondent tenant as under:- Paragraph 12-“ That accordingly the petitioners filed an application for amendment through which the figures rs.20,00,000/- was sought to be substituted by figure of Rs. 47,38,000/- and figure of Rs.16,66=66 was sought to be substituted by figure of Rs.39,483/-. A true copy of the said application is annexed and marked as Annexure ‘4’ to this writ petition. Paragraph 14- “That thereafter additional written statement was filed by respondent No. 1 on 14-7-95. Paragraph 25- “That the lower appellate court ignored the fact that the application was moved on 9-11-90 and the case was decided 15-11—96. Had the case been decided earlier the money would have doubled on the market rate of interest. On the other hand counsel for the respondent has relied upon the following case law as mentioned in his written arguments. The same are quoted below:- Paragraph 3-“ Tat the valuation of the property in question at the time of initiating the case was or Rs. 20,00,000/- and the Learned Appellate Court has considered all the evidences produced by the petitioner and has told that as per the decision given in Mahavir Prasad Vs .Collector and others reported in 1987 ALL P-30 that the Market value of the property depends on the amount which is acceptable to the purchase. It is relevant to mention here that during the pending of the case before Prescribed Authority the deal was started between the parties to sale and purchase the property and vide documentary evidence, it was proved that the both the parties agree to on the amount of Rs. 20.18,500/-. The assessment made by the prescribed authority on the basis of documents produced by the petitioner is totally wrong.” Paragraph 5- “That the Appellate Court after considering the judgment passed by the High Court and Apex Court rightly reached on the conclusion that in the present case amendment will apply retrospective. The appellant Court has rightly rely on the case; “AIR 1989 SC 1247, AIR 1995 All 303” Paragraph 6- “That as per the provision of section 69(2) and (3) of the Partnership Act 1932, no suit to enforce a right arising from a contact shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the register of firm as per partner in the firm. The building was let out on rent by firm M/s Deleep Singh and sons and the firm was not registered. The application for enhancement of rent was moved by the partners of the firm which is not maintainable as per the provision of section 69(2) of the partnership Act 1932. The case law in support of the contention was also case before the Appellate Court and here in below:- AIR 1964 ALL 352 Jagdish Chand Gupta Vs. Bajoriya Traders (1998) 7SCC 184 Rapatakas Brett and Company Ltd. V.s Ganesh Property.” Section 21(8) of UP Act No. 13 (1972) provides for the enhancement of the monthly rent. It writes as under:- “ Nothing in clause (a) of sub-section (1) shall apply to a building let out to the State Government or to local authority or to a public sector corporation or to a recognized educational institution unless the Prescribed Authority is satisfied that the landlord is a person to whom clause (ii) or clause (iv) of the Explanation to sub- section (1) is applicable Provided that in the case of such a building the District Magistrate may, on the application of the landlord enhance, the monthly rent payable therefore to a sum equivalent to one-twelfth of ten per cent of the market value of the building under tenancy, and the rent so enhanced shall be payable from the commencement of the month of tenancy following the date of the application: Provided further that a similar application for further enhancement may be made after the expiration of a period of five years from the date of the last order of enhancement. Counsel for the petitions has stated that in the year 1990 market value of the premises was assessed by the him at about Rs. 20,000,000 (Twenty Lacs) as such the landlord has prayed for enhancement of the rent of the premises to the extent of 1/12 of 10% of the market value of the premises which comes to 16,666.66 per month. The counsel for the petitioners has relied upon the report of Government approved and L.S.C panal valuer namely M/s Arvind Architects being licence No. CA/025/9268 valuing the property to the extent of Rs. 47,38000/ as on 1.8.93 and the present value to the extent of 58,90,000 was valued. During the pendency of the application, the petitioners have amended the prayer to the extent of Rs 47,38000/- instead of 20,00000 and the claim of rent was enhanced to the extent of Rs. 39,403 instead of Rs.16,666.66. The amendment application was allowed on 30.6.1993. The respondent Bank has also filed additional written statement. Sri. A. Singhal who is a approved valuer has stated as under:- (i) That the deponent is architect since 1971 and Govt. Approved valuer and LIC Panel valuer sincer 1986. The deponents licence number is CA/85/9268 and his valuer’s licence No is Cat I- 3154. The deponent has on 4-7-93,22-7-93,23-7-93 taken measurements of land, buildings and made drwings of property no. 98 Hardwar Road, Dehradun, and is, therefore, full by acquainted with the facts deposed to here under. (ii) “That the deponent was asked to prepare the valuation of property as on 9.1.90, as also its present valuation. The entire property comprises of land measuring 5305. 12 sq.mts. with 4 blocks of building variously named by the owners for convenience sake. The deponent has prepared three sheets of plans showing the land and buildings and detailed the construction in four abstracts of costs which he has arrived at on the basis of U.P.P.W.D schedule of rates effective Ist Oct., 1989 giving the allowance to depreciation since its construction in 1965. The deponent has valued the land as per circle rates prevailing on 9.1.1990. (iii) That valuation of land and property 98, Haridwar Raod, Dehradun as on 9.1.1990 calculated on the above basis was Rs.47,38,000/- thought is open market value could be more. (iv) That ever since 9.1.1990 U.P., PWD Schedule of rates and the circle rate have been revised. Present market value of the land and building on the basis of revised rates comes to Rs. 58,90,000/-. During the pendency of the case the respondent No. 1 has also sought the amendment to the extent that after the enactment of U.P. Act No. 5 of 1995 the provision of Act No.13 of 1972 shall not be applicable as the rent is more than Rs.2000/- The amendment was allowed. On behalf of the Counsel for the Bank it was stated that the tenancy has commenced on the basis of lease deed at 7.5.1986 by M/s Dalip Singh and sons and as such the application on behalf of the petitioner was not maintainable. It was stated that the Bank was offered by a letter dated 7.12.92 to purchase the property for Rs. 210,8500/-. In paragraph 9 of the writ petition following statement was made:- “That during pendency of the aforesaid proceedings respondent No.1 had written a letter on 7.12.1992 through which approval was accorded to purchase the property for s. 20,18,500/- (Rs. Twenty Lacs Eighteen thousand five hundred. So far as valuation part is concerned as will appear from the order passed by the prescribed Authority tht on 10.6.93 that parties were given opportunity to prove the valuation by taking report from the valuer. The Petitioner has fixed the valuation report according to the valuer Sri Arvind Singhal. No report was filed by the tenant. The report of the valuer of the petitioner was also taken into consideration as will appear from the Judgment of the prescribed Autority to the falling effect:- U;k;ky; ds vkns’k fnukad 0-06-1993 ds vuqikyu esa Hkou Lokeh }kjk izLrqr ewY;kdau vk[;k ,oa csY;wyj ds ‘kiFk Ik ds voyksdu ls fofnr gS fd iz’uxr lEifRr dk ewY;kadu tkjh 1990 dks Hkou fuekZ.k ds fy;s mRRkj izns’k lkoZtfud fuekZ.k foHkkx dh izpfyr njska vkSj Hkwfe ds ewY; gsrw fu/kkZfjr lfdZy jsaV dks vk/kkj ekudj lEifRr dks ewY;kdau nksuks ewY;ks dks lfEefyr djds fd;k x;k gSA lEifRr ds ewY;kdau es ls muds 24 o”kZ iqjkus fuekZ.k dks 1-5 izfr’kr @ izfro”kZ ds vuwlkj fuekZ.k djus ds mijkUr laifRr dk dqy cktkjh ewY; 47]38]000]@& :Ik;s gks x;k gSA bl ewY;kdau vk[;k ds fo:} foi{kh }kjk lEifRr ds fu;e Hkwfe ,oa vkdf.kr ewY;kdu ds fy;s n’kkbZ njksa ds lac/k esa dksbZ vkifRr izLrqr ugh dh xbZ gSa rFkk ewY;kadu ds fy;s fuekZ.k dh njksa ,oa Hkwfe dh njsa ‘kklu }kjk fu/kkZfjr njksa ds vuqlkj gSA ewY;kadu drkZ }kjk lEifRr dh iznf’kZr cktkjh dher 47]38]000@& :i;s Lohdkj dh tkrh gSA vf/kfu;e dh /kkjk 21¼8½ esa fn;sa izkfo/kkuksa ds vuqlkj laifRr ds ewY; ds 10 izfr’kr ds 12osa Hkkx dks ekfld fdjk;sa ds :i esa Lohdkj fd;k tkuk gSA vr% 47”38”000@& :i;sa dk 10 izfr’kr 4]73]000@& o bldk 12oka Hkkx 39]438 ½¼ vFkkZr 39]480:i;sa ½ vkrk gSA lEifRr dk ekfld fdjk;k 39]480&00 : Lohdkj fd;k tkrk gSaA Thus there is no material on record to hold that the valuation report submitted by the petitioners is wrong or the market value as submitted by the value of the petitioner are not correct. As will appear from the averments in the writ petition and the Counter Affidavit, that the valuation report filed by the petitioner remained unrebutted. It is well settled that there is difference between the market value of the property and the sale price, as the property in the tenancy, is to be sold on the price given by the tenant. The prescribed authority therefore has rightly calculated the rent in the following manner:- vf/kfu;e dh /kkjk 21¼8½ es fn;s x;s izkfo/kkuksa ds vuqlkj laifRr ds ewY; ds 10 izfr’kr ds 12osa Hkkx dks ekfld fdjk;s ds :Ik esa Lohdkj fd;k tkuk gSA vr% 47]38]000@ :I;s dk 10 izfr’kr 4]73]000@& o bldk 12okW Hkkx 39]438&00 ¼vFkkZr 39]480@& :0½ vkrk gSA lEifRr dk ekfld fdjk;k 39]480&00 :I;s Lohdkj fd;k tkrk gSA The appellate authority on the basis of the offer made by the respondent No. 1 has calculated the market value to the extent of 20 lakh 10 thousand five hundred rupees and as such has not agreed to the extent of R.s 47, 38000/- The aforesaid findings have been recorded on the basis of conjectures, as neither the appellate authority has considered the valuation report of the approved valuer nor any other valuer at the instance of the respondent No. 1 ha given his report. In Smt. Padma Tandon V. District Judge, Allahabad and others reported in 1992(2) ARC page 180. It has been held that while fixing the valuation market should be the criteria and not on the letting value or municipal assessment. It has been held as under:- “The rate fixed by the District Finance Officer for the market value of the land at Rs.100 per Sq. Meter as the minimum and Rs. 125 per Sq. Meter award. According to the learned Judge the market price fixed by the District Finance Officer was for the purposes of stamp duty. But the same price would not be available where the building is under tenancy and in occupation of the State and possession of which would not be available within a reasonable time after the sale. Thus no willing purchaser would offer the aforesaid price fixed for the purposes of registration. In my opinion, the learned Judge was not correct in ignoring the value of the land as fixed for the purposes of stamp duty by the Government itself. The aforesaid rates of the State Government have both outer limit and the inner limit to cover all such contingencies and there may be some further special reasons from deviating from the aforesaid valuation. But there seems to half of the value as fixed by the State Government which was the circle rate prevailing at the relevant time. The very purpose of the enactment for enhancement of rent of the building occupied by the Government would frustrate for fixation of market value in case the consideration is, that, as the possession of the buildings is not readily available, the willing purchase would pay very low price. The provision of Section 21(1) (a) of the Act are not available to the landlord and, as such, he is adequately compensated by reasonable rent possessed on the basis of market value. In my opinion, the market value for the purpose of Section 21 (8) of the Act has to be assessed irrespective of the consideration as to what value the willing purchaser would offer in case the possession of the building is not readily available. The consideration of timely possession would not be applicable in the present case for termination of market value.” “in my opinion, the interest of landlord of such buildings have been adequately taken care by making suitable provisions and providing for the assessment of rent on the basis of market value and not on the basis of letting value or annual rental value or on the basis of Municipal assessment. The learned Judge grossly erred in taking into consideration the fact that he disputed building would remain under the tenancy and this aspect would completely diminish the value of the building and the prospective purchaser of the property would not invest any sum.” Further, guide line has been provided for enhancement of the rent in Deepak Kumar Tyagi and others V. Vth Additional District Judge, Saharanpur reported in 1994 (1) , ARC page-510. The guide line is reproduced as under:- “Where no other data are available, two methods are adopted for determining the market value of a building:- (i) The rend normally realized if let, or if not let, the expected rent and capitalizing it by number of years’ purchase of the annual rent derived from the property; and (ii) By valuing the land and the building separately and adding the value of one to the other. “The first method cannot be adopted din the case where the rent of the building has to be enhanced on the basis of the market value. It is then the last method i.e. by ascertaining the value of the land and the cost of the construction on it. The last method has been taken as very weak method because some times it does not represent the real market value of the property. In a case, where the building on the ground floor is used for commercial purpose and first floor for residential purpose and basement for different purpose each one has its own independent value. If a willing purchaser goes to purchase shops or commercial portion of the building he will pay a higher price and for residential portion on the first floor he will pay a higher price. The value of the basement will be differently assessed. In Ram Shekhar and another V. Chairman, City Improvement Board. Mysore, AIR 1957 Mysore 57, it was held that the valuation of land with building thereon by valuing the land and the building separately and adding the value of one to the other does not furnish the reliable estimate of the property.” “In a case, however, there is no other possible method to assess the market value of the property the Court is left with no other method except to ascertain the market value of the property taking into consideration the value of the land and the cost of the construction existing on such land.” Similar, view has been taken 2000(1) ARC page no.-431 in Punjab and Sindh Bank Vs. VII the ADJ, Bulandshahar and others. After relaying upon the judgment of Apex Court it has been hold as under:- “It is well settled in law that the