Case: Chunilal Vithaldas Vs. Mohanlal Motilal Patel

one Masataram a consulting architect estimated the cost of the structure to be Rupees 2,35,777-1-2 at the rates prevailing in 1950. He stated that the prices prevailing in 1954 when he gave evidence were a little lower than the prices prevailing in 19.50, though in respect of certain items the prices may have gone up." The Trial Court and the District Court regarded his evidence as reliable, but having regard to the fact that in constructing the theatre the respondent had used some second-hand material, the Courts below held that the cost of the structure was truly shown by the accounts of the respondent, and that conclusion must be accepted.16. It is then urged that ordinarily in towns like Bombay, Ahmedabad and Poona standard rent is determined as equivalent to one-twelfth of the gross return on the sum invested by the landlord at the rate of 8.66 per cent on the cost of the building, and at the rate of 6 per cent on the value of the land, and since the gross rate includes municipal taxes which vary between 25 per cent to 38.33 per cent of the letting value standard rent is considered as reasonable if it fetches to the landlord 41/2 per cent per annum on the value of the land and 5 1/2 per cent on the cost of building. It is true that in the city of Bhavnagar no municipal taxes and rates were, at the material time, Charged by the Municipality, and, therefore, some adjustment would have to be made in ascertaining the percentage of gross return on the investment in determining standard rent. It is common ground that charges for water supply are made by the Municipality. There is, however, no evidence on the record to show as to what the rates for water supplied by the Municipality were. It was faintly suggested by counsel for the appellant that the water charges are payable by the tenant, but there is nothing to support that contention. The appellate Court has, on a consideration of the evidence, come to the conclusion that an overall rate of 7 per cent on the investment for the building and land may be regarded in the town of Bhavnager as an adequate return to the landlord. What rate of return in respect of the landed property may be regarded as reasonable in determining the standard rent under S. 11 of the Act depends upon certain variable factors. Normal expected yield from immovable property in the locality, return from alternative investments, municipal and other charges, the use to which the property is to be put, its condition, repairs it needs to keep it in tenantable condition and a host of other related circumstances must enter into the determination. On a review of the reasons given, it cannot be said that the District Court committed any error of principal in coming to the conclusion that 7 per cent gross return on the cost of construction should be regarded as an adequate return from the property in the town of Bhavnagar which is utilized for a cinematograph theatre.17. Two other questions remain to be considered. Even though it was not pleaded in the petition filed by the appellant that possession of a part of the building let out was not delivered, the appellant was permitted, without objection, to raise that question at the trial. It was the case of the appellant that possession of the cellar and the space reserved for a restaurant were not delivered to him, and on that account appropriate deduction should be made from the standard rent. The respondent conceded that possession of the cellar was not given to the appellant, but his case was that he did not deliver the cellar because it was not included in the premises demised in favour of the appellant. Unfortunately the lease has not been printed in the paper book and the parties have not chosen to produce for our perusal a copy of the lease. We have not thought it necessary to hold up the proceeding in this Court in view of the ultimate order we propose to make in this appeal. The Trial Court was of the view that having regard to the carpet area of the cellar Rs. 100 per mensem should be deducted from the standard rest of the entire building. The District Court without giving any reasons observed that fair standard rent for the cellar would be Rs. 50 per mensem In our view the Court was not right in reducing the proportionate rent of the cellar from Rs. 100 to Rs. 50. The question whether the cellar was let out to the appellant under the terms of the lease will be determined by the High Court of Gujarat before which the appeal flied by the respondent is pending. We have for the purpose of this appeal held, agreeing with the District Court that the standard rent of the entire building is Rs. 1,200 per mensem. If the cellar is not included in the tenancy, Rs. 100 will have to be deducted and the standard rent will be Rs. 1,100 per mensem.18. The other matter in dispute relates to the space intended to be used for a restaurant. The respondent contended that possession of that room was delivered to the appellant: the appellant denied that it was so delivered. It is common ground that it was part of the premises leased. Enquiry into the question whether by reason of default on the part of the landlord in delivering possession of a part of the premises let out under the lease any loss was occasioned to the tenant and to what relief the tenant is entitled on that account is foreign to the determination of standard rent. We, therefore, decline to enter into the question whether possession of the pace intended for use as restaurant was delivered by the respondent to the appellant. The decision of the Courts below on that part of the case is vacated.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6. It is somewhat unfortunate that the appeal filed by the respondent has been admitted to the file and is to be heard on the merits, while the appeal filed by the appellant was summarilyare unable to agree with that plea.It is true that in the body of S. 100 of the Code of Civil Procedure the Legislature has not used the expression "second appeal". That expression, however, occurs in the marginal note of S. 100 and in the text of Ss. 101, 102 andare of the view that a second appeal under S. 28 of the Act may be entertained by the High Court within the limits prescribed by S. 100 of the Code of Civil Procedure, and it is not open to the parties to demand reappraisal of the evidence by the High Court on the ground that the District Court has erred in its view of the evidence. The High Court of Bombay was apparently of the view that no question of law arose in the appeal, and it was competent to dismiss the appeal under O. 41, R. 11 (1) of thedo not think that the Courts below committed any error of law or misconceived the evidence in holding that only Rs.be disallowed out of the total cost of construction on the round that they could not reasonably enter thethat would be a wholly faulty method of valuation. Rent received from a structure, is determined not merely by the nature of the structure and the accommodation provided thereby, but also by the situation and the amenities provided by the land on which the structure stands. A building when let out forms a composite unit with the land on which it stands, and the rent received from the buildings cannot be wholly attributed to the building. The respondent purchased the property with a view to pull down the houses thereon and to put up a building adapted for use as a cinematograph theatre. It is true that some rent was recovered from the tenants before the structures were pulled down. But since the respondent purchased the land and the buildings for putting up a new building thereon, he may reasonably be regarded as having paid for the property purchased the value of the land and of the debris of the superstructures. The debris which by sale fetched Rs.has been given credit for in arriving at the total cost of the theatre.15. It is also worthy of note that one Masataram a consulting architect estimated the cost of the structure to be Rupeesat the rates prevailing in 1950. He stated that the prices prevailing in 1954 when he gave evidence were a little lower than the prices prevailing in 19.50, though in respect of certain items the prices may have gone up." The Trial Court and the District Court regarded his evidence as reliable, but having regard to the fact that in constructing the theatre the respondent had used somematerial, the Courts below held that the cost of the structure was truly shown by the accounts of the respondent, and that conclusion must beis true that in the city of Bhavnagar no municipal taxes and rates were, at the material time, Charged by the Municipality, and, therefore, some adjustment would have to be made in ascertaining the percentage of gross return on the investment in determining standard rent. It is common ground that charges for water supply are made by the Municipality. There is, however, no evidence on the record to show as to what the rates for water supplied by the Municipality were. It was faintly suggested by counsel for the appellant that the water charges are payable by the tenant, but there is nothing to support that contention. The appellate Court has, on a consideration of the evidence, come to the conclusion that an overall rate of 7 per cent on the investment for the building and land may be regarded in the town of Bhavnager as an adequate return to the landlord. What rate of return in respect of the landed property may be regarded as reasonable in determining the standard rent under S. 11 of the Act depends upon certain variable factors. Normal expected yield from immovable property in the locality, return from alternative investments, municipal and other charges, the use to which the property is to be put, its condition, repairs it needs to keep it in tenantable condition and a host of other related circumstances must enter into the determination. On a review of the reasons given, it cannot be said that the District Court committed any error of principal in coming to the conclusion that 7 per cent gross return on the cost of construction should be regarded as an adequate return from the property in the town of Bhavnagar which is utilized for a cinematographhave for the purpose of this appeal held, agreeing with the District Court that the standard rent of the entire building is Rs. 1,200 per mensem. If the cellar is not included in the tenancy, Rs. 100 will have to be deducted and the standard rent will be Rs. 1,100 per mensem.It is common ground that it was part of the premises leased. Enquiry into the question whether by reason of default on the part of the landlord in delivering possession of a part of the premises let out under the lease any loss was occasioned to the tenant and to what relief the tenant is entitled on that account is foreign to the determination of standard rent. We, therefore, decline to enter into the question whether possession of the pace intended for use as restaurant was delivered by the respondent to the appellant. The decision of the Courts below on that part of the case is vacated.