*HON’BLE SRI JUSTICE R.KANTHA RAO + C.R.P.Nos.1626,2144,2151 and 2652 of 2008 % Date: 08.06.2011 C.R.P.Nos.1626, 2144 and 2151 of 2008 Between: #Smt. Shakuntala Devi Darak …Revision petitioner And $M/s. Transport Corporation of India Ltd. Secunderabad …Respondent C.R.P.No. 2652 of 2008 Between: # M/s. Transport Corporation of India Ltd. Secunderabad …Revision petitioner And $ Smt. Shakuntala Devi Darak …Respondent ! Counsel for petitioners in CRP Nos.1626,2144 & 2151/08: Sri Damodar Mundra. ^ Counsel for respondents in CRP Nos.1626,2144 & 2151/08 Sri B.S. Prasad. ! Counsel for petitioner in CRP No.2652 of 2008: Sri B.S.Prasad ^ Counsel for respondent in CRP No.2652 of 2008: Sri Damodar Mundra < GIST: >HEAD NOTE: ? Cases referred: [1] (2007) 1 SCC 202 2 AIR 1961 SC 1067 THE HON’BLE MR JUSTICE R. KANTHA RAO C.R.P.Nos.1626,2144,2151 and 2652 of 2008 Date:08.06.2011 C.R.P.Nos.1626, 2144 and 2151 of 2008 Between: Smt. Shakuntala Devi Darak …Revision petitioner And M/s. Transport Corporation of India Ltd. Secunderabad …Respondent C.R.P.No. 2652 of 2008 Between: M/s. Transport Corporation of India Ltd. Secunderabad …Revision petitioner And Smt. Shakuntala Devi Darak …Respondent THE HON’BLE MR JUSTICE R. KANTHA RAO C.R.P.Nos.1626, 2144,2151 and 2652 of 2008 COMMON ORDER: C.R.P.No.2151 of 2008 is filed against the order dated 14.03.2008 passed by the Additional Chief Judge, City Small Causes Court, Hyderabad dismissing the R.A.No.118 of 2007. Whereas, C.R.P. No.2144 of 2008 is filed against the judgment dated 14.03.2008 passed by the Additional Chief Judge, City Small Causes Court, Hyderabad partly allowing the R.A.No.109 of 2007. These two revisions are preferred by the landlady. CRP No.2652 of 2008 is filed against the judgment dated 14.03.2008 in R.A.No.109 of 2007 partly allowing the appeal by enhancing the rent. This C.R.P. is preferred by the tenant. CRP No.1626 of 2008 is filed by the landlady against the judgment dated 14.03.2008 passed by the Additional Chief Judge, City Small Causes Court, Hyderabad in R.A.No.110 of 2007. This C.R.P. is filed by the landlady assailing the order passed by the appellate authority which rejected her plea of eviction by allowing the appeal filed by the tenant. Thus, all the four revision petitions relate to fixation of fair rent. C.R.P. No.1626 of 2008 relates to eviction under the relevant provisions of A.P. Buildings (Lease, Rent and Eviction) Control Act. In the first place, I would like to take up the revision petitions relating to fair rent for consideration and later the revision petition relating to eviction. For the sake of convenience, I would like to refer the parties as ‘the landlady and the tenant’ in all the revision petitions. C.R.P.Nos.2144 and 2151 and 2652 of 2008: These revisions relate to fixation of fair rent under Section 4 of A.P. Buildings (Lease, Rent and Eviction) Control Act, 1964 (for short ‘the Rent Control Act’). Smt. Shakuntala Devi Darak, the landlady filed R.C.No.320 of 2005 under Section 4 of the Act for fixation of fair rent for the schedule premises which are non-residential one. Admittedly, the schedule premises bearing Municipal No.21-6-788 admeasuring 6058 square yards is situate in the land Chelapura, Mehboob-ki- Mehandi, Hyderabad which was leased out by the landlady to the tenant M/s. Transport Corporation India Limited on 10.06.1965 on a monthly rent of Rs.1700/-. The rent was enhanced from Rs.1700/- to Rs.2750/- only in the year 1991. The landlady filed the rent control case for fixation of fair rent after the advent of A.P. Act 17 of 2005 which amended Section 32 (c) raising the rent limit for buildings falling within the areas of Municipal Corporation to Rs.3500/- per month for the purpose of jurisdiction and the said amendment came into force with effect from 28.05.2005. Earlier the ceiling of the rent for the purpose of jurisdiction under the Act was Rs.1,000/-. It was contended by the landlady before the learned Rent Controller that similar accommodation in the locality where the schedule premises is situate fetches rent not less than Rs.10/- per square foot per month and that she claimed rent of Rs.5/- per square foot per month and the said premises being an extent of 54522 square feet, she claimed rent of Rs.2,72,610/- per month. The landlady also stated in her petition seeking fixation of fair rent that the schedule premises is situate in the business locality and the tenant has been using the same for business purpose. The tenant, however, vehemently opposed the petition filed by the landlady for enhancement of rent. According to the tenant, the enhancement of rent sought by the landlady is highly exorbitant. It has been contended by the tenant that the landlady agreed to construct a godown with RCC structure admeasuring 12860 square feet in the schedule premises and agreed to charge rent of Rs.1/- per square foot, but went back on her promise and filed a petition for fixation of a fair rent to harass it. The tenant also took the plea that it has been paying the monthly tax to a tune of Rs.86,000/- per year and prayed to dismiss the petition. The learned Rent Controller accepted the version of the landlady and fixed the fair rent of the schedule premises at Rs.2,72,610/- per month by enhancing the same from Rs.2750/- per month. The learned Appellate Authority, however, in the appeal filed by the tenant fixed the fair rent at Rs.82,000/- per month by partly allowing the appeal. The learned counsel appearing for the landlady would submit that fixation of fair rent by the learned Rent Controller at Rs.2,72,670/- is reasonable, arrived at by considering all the relevant factors required for fixation of fair rent and that the appellate authority ought not to have interfered with the fair rent arrived at by the Rent Controller and reduced it to Rs.82,000/-. On the other hand, the learned counsel appearing for the tenant contended that even enhancing the rent of the schedule premises to Rs.82,000/- is unreasonable, there was no evidence or criteria before the learned appellate authority to fix the fair rent at Rs.82,000/-, the rent has been abnormally increased from Rs.2750/- per month to Rs.82,000/- and the same is liable to be set aside. I have gone through the pleadings of both parties. Perused the evidence on record and the orders passed by the learned Rent Controller and the Appellate Authority. The fact that the premises is situate in a commercial locality and is leased out by the landlady for business purpose is not in dispute. There is also no dispute about the fact that the lease was entered into in the year 1965 on agreed rent of Rs.1700/- and it was enhanced only in the year 1991 i.e. after a period of 26 years and even the enhanced rent of Rs.2750/- is very low since the premises is situate in commercial area in the city of Hyderabad. The further enhancement was asked for in the year 2005 i.e. 14 years thereafter. The learned Appellate Authority while dealing with the appeal relating to fixation of fair rent under Section 4 of the Act, kept in mind the principles laid down by the Apex Court and this Court, such as, the locality in which the premises is situate and steep increase in rents of urban properties in recent times which the Apex Court reminded that the judicial notice of the said fact can be taken. The learned Appellate Authority also took into consideration the admitted facts and also the admissions made by RW-1 in the cross-examination who was examined on behalf of the tenant. The learned Appellate Authority considered the large extent of schedule premises which is admittedly used as godown for commercial purpose i.e. transport purpose of the tenant. The factors viz. the admission of RW-1 that in March, 2001 a sum of Rs.4,48,163/- was demanded by the Municipal Corporation of Hyderabad as property tax for the schedule mentioned premises and the tenant had been paying property tax nearly Rs.6,000/- per month from 2000-01 to 2004-05 and the very fact of the tenant choosing to remain in the premises by paying such huge amount of property tax. The learned Rent Controller considering the entire material on record fixed the fair rent at Rs.2/- per square foot for the entire schedule mentioned premises; whereas the Appellate Authority considering that 50% is the constructed area and 50% is the open place in the schedule premises fixed the fair rent at Rs.2/- per square foot for the constructed area i.e. 2,71,250 square feet and at Rs.1/- per square foot in respect of the remaining 50% area and accordingly arrived at R.82,000/- as fair rent. The learned appellate authority has thoroughly gone through the pleadings of the parties, scrutinized the evidence on record and upon carefully considering the facts and circumstances of the case, rightly arrived at the fair rent at Rs.82,000/-. I absolutely see no force in the submission made by the learned counsel for the tenant that the appellate Authority did not take into account any criteria for fixation of fair rent and there was no material before the Appellate Authority for fixation of fair rent. Fixing fair rent at Rs.82,000/- per month by the appellate Authority by partly allowing the appeal filed by the tenant, in my view is based on evidence and reasoning and by following the principles governing fixation of fair rent under Section 4 of the Rent Control Act. There are no valid grounds to interfere with the judgment passed by the learned Appellate Authority. For the foregoing reasons, the judgments dated 14.03.2008 passed by the Additional Chief Judge, City Small Causes Court, Hyderabad in R.A.Nos.109 of 2007 and 118 of 2007 are confirmed and consequently, C.R.P.Nos.2144, 2151 and 2652 of 2008 filed by the landlady and the tenant are dismissed. C.R.P.No. 1626 of 2008: This revision petition relates to eviction. The learned Rent Controller by his order dated 28.03.2007 in R.C.No.291 of 2005 considering the entire evidence on record arrived at the finding that the tenant committed willful default in payment of complete rent for the period alleged in the eviction petition and accordingly ordered its eviction. The said finding, however, was reversed by the learned appellate Authority by his judgment dated 14.03.2008 in R.A.No.110 of 2007. The learned Rent Controller was clearly of the view that the tenant is liable to pay the rent as well as the municipal tax and other taxes which was agreed to be paid under Ex.P-1 lease agreement. Further he was of the view that even after the dates stipulated in the lease agreement, the tenant shall continue to pay the rent as well as the taxes agreed under the lease agreement and having failed to do so, committed willful default in payment of rent and it is therefore liable for eviction. It requires to be noticed that it is mentioned in Ex.P-1 lease agreement as well as in the counter filed by the tenant that apart from paying the rent agreed for the schedule premises, the tenant shall pay all the electricity charges, water charges and the property tax. RW-1, a witness examined on behalf of the tenant had categorically admitted in his cross-examination about the agreement relating to payment of rent as well as all the taxes. The learned appellate authority expressed the view that though there is condition in the agreement whereunder the tenant undertook to pay all the taxes, the said condition which is recited in clause 8 of Ex.P-1 lease agreement will not bind the tenant after the expiry of the lease period, even if it continues in possession of the premises after the expiry of lease period, it is no longer liable to pay the taxes and for non-payment of taxes, it is not liable for eviction. One of the contentions urged on behalf of the tenant is that the tenant was paying rent of Rs.2750/- apart from paying municipal taxes and other taxes to a tune of Rs.80,000/- per annum. The total amount which was paid towards rent exceeds Rs.3500/- per month and therefore, in view of Section 32( c ) of the Rent Control Act, the suit premises is not covered by the Rent Control Act and the authority under the Rent Control Act has no jurisdiction to decide the dispute. In HOTEL KINGS AND OTHERS v. SARA FARHAN LUKMANI AND OTHERS[1] the question arose before the Supreme Court was in case of the lease for payment of the lease rents on a monthly basis in advance on or before the 5th day of each calendar month, whether the trial the Judge was right in holding that having regard to the provisions relating to payment of rates and taxes and other outgoings by the lessee, in effect the lease would be governed under Section 12(3)(b) and not Section 12(3)(a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (“the Bombay Rent Act”). The Supreme Court answering the question in the negative held as follows: “Even though the lease deed contained a provision for payment of the rates and taxes exclusively by the lessee and it is also stipulated that the lessor will have no liability therefor, the lease will still be governed under Section 12(3)(a) of the Bombay Rent Act as held by the Appellate Bench of the Small Cause Court and affirmed by the High Court. The lease deed makes it abundantly clear that the lease rent was required to be paid on a monthly basis. The argument advanced on behalf of the lessee that notwithstanding the said stipulation, since the lessee was required to pay the rates and taxes which formed part of the permitted increase and was, therefore, a part of the rent payable, cannot be accepted.” Therefore, as per the Supreme Court though apart from the rent, municipal tax and some other taxes are agreed to be paid by the tenant, they should be treated as other liability, but not the rent. The learned appellate Authority, however, referred to Section 108(g) of the Transfer of Property Act, which reads as follows: “If the lessor neglects to make any payment which he is bound to make, and which, if not made by him is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor.” The appellate Authority arrived at the opinion that the tenant is entitled to adjust the municipal property tax against the rent payable. But from the judgment of the learned appellate Authority, it is obvious that the appellate Authority is conscious of the fact that course available under Section 108(g) of Transfer of Property Act is subject to any agreement between the landlady and the tenant and if the landlady is able to prove that the tenant is liable to pay the tax as part of the rent, the tenant cannot exercise the right available to him by Section 108(g) of Transfer of Property Act. The learned appellate Authority is of the view that after the expiry of the lease, the schedule premises were governed by the Transfer of Property Act till 28.05.2005 on which date the A.P. Buildings (Lease, Rent and Eviction) Control Act 1960 was amended by A.P. Act 17/2005 bringing the suit premises under the provisions of the Rent Control Act and even thereafter, according to the learned appellate Authority, the tenant’s right to adjust property taxes paid by it against the rents payable subsists in view of Section 108(g) of the Transfer of Property Act unless it is shown that the tenant has agreed to pay the property tax as part of the rent. It is clearly stipulated in clause 8 of Ex.P-1 registered lease agreement dated 10.06.1965 that the tenant has to pay the property tax and other taxes apart from the rent agreed and the tenant will continue to pay the property tax and other taxes. The lease under Ex.P-1 is for a period of 21 years and it was expired by 09.06.1986. The tenant continued to pay the taxes till the year 2000-2001. Therefore, even after the expiry of the lease, the tenant continued to pay the taxes. The contention of the landlady is that after the expiry of contractual tenancy, when the tenant continues in possession of the property, even if the landlady accepts rent paid by the tenant, the tenant cannot be said to be a tenant by holding over and therefore, no notice is required under Section 106 of Transfer of Property Act to evict him. In support of the said contention reliance is placed by the learned counsel appearing for the landlady on GANGA DUTT MURARKA v. KARTIK CHANDRA DAS AND OTHERS[2] wherein it is held as follows: “Where a contractual tenancy to which the rent control legislation applies has expired by efflux of time or by determination by notice to quit and the tenant continues in possession of the premises by virtue of statutory protection, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord has assented to a new contractual tenancy, the tenant had not acquired the status of tenant holding over and a notice under Section 106 of Transfer of Property Act is not required to evict the tenant.” In the instant case also the view expressed by the learned appellate Authority that after the expiry of the contractual lease, a new contract of lease was commenced and the tenant is no longer required to pay the taxes apart from rent or that he is entitled to deduct the taxes from the actual rent agreed to be paid, has no foundation in law. In view of the decision referred above, the status of the tenant is that of a tenant by the sufferance and not tenant by holding over. Absolutely there is no basis for the tenant to contend that a new tenancy was commenced and it is no longer required for it to pay the taxes apart from the actual rent. Thus, the learned appellate Authority is clearly in error in holding that since there was no separate agreement between the landlady and the tenant to pay the taxes apart from the agreed rent after the expiry of lease, it is not possible to hold that the tenant committed willful default in payment of rent. The question whether there was any separate agreement between the landlady and the tenant about the payment of taxes apart from actual rent which was agreed does not arise because the landlady never consented to continue the tenancy after the expiry of the lease. The view taken by the learned appellate Authority that the landlady by her own conduct allowed the tenant to continue in the premises by paying heavy amounts as property tax to the Municipal Corporation of Hyderabad till the date of filing of the eviction petition, it is more than the actual rent which was agreed to be paid and therefore, the tenant cannot be said to have committed willful default in payment of rent is contrary to the settled principles of law on the subject. The conduct of the tenant clearly amounts to committing willful default in payment of rent and as rightly held by the Rent Controller, it is liable for conviction on the said ground. The finding of the learned appellate Authority being contrary to the settled legal principles governing the subject is liable to be set aside in this revision. Consequently, the judgment dated 14.03.2008 passed by the Chief Judge, City Small Causes Court, Hyderabad in R.A.No. 110 of 2007 is set aside and the order dated 28.03.2007 passed by the Principal Rent Controller, Hyderabad in R.C.No. 291 of 2005 is restored. The tenant/respondent is directed to vacate the petition schedule property within two months from the date of this order. C.R.P.No.1626 of 2008 is allowed. For the foregoing reasons, C.R.P.Nos.2144, 2151 and 2652 of 2008 are dismissed. C.R.P.No.1626 of 2008 is allowed and the tenant/respondent is directed to vacate the petition schedule property within two months from the date of this order. There shall be no order as to costs. _______________ Date:08.06.2011. R. KANTHA RAO, J Note: L.R. copy to be marked. B/O Ccm THE HON’BLE MR JUSTICE R. KANTHA RAO C.R.P.Nos.1626,2144,2151 and 2652 of 2008 Date:08.06.2011 [1] (2007) 1 SCC 202 [2] AIR 1961 SC 1067