Case: Roshan Lal Mehra Vs. Ishwar Das

3. Having made these preliminary remarks with regard to the classification of the appeals, we proceed now to state the facts with regard to the first category of appeals relating to the "Chemists Market" in Bhagirath Colony. On July 30, 1948, nine tenants made an application to the Rent Controller, Delhi, asking for a determination of fair and standard rent of the tenements (shops) rented to them by the landlord, on the ground that under the stress of circumstances which resulted from the partition of the country and scarcity of business premises available in Delhi after partition, they were forced to take on rent the shops in question on an excessive and exhorbitant rate of rent charged by the landlord. They alleged that the premises were completed after March 24, 1947, and they were entitled to have the fair and standard rent determined for the shops in question by the Rent Controller. On August 12, 1948, the Rent Controller recorded an order to the effect that in order to fix the rent of the shops in question in accordance with S. 7A read with Sch. IV of the Control Act, 1947 a summary, enquiry would be held on August 18, 1948. A notice was issued to that effect to the landlord, directing him to attend and bring all retevant authenticated records such as plans, account books, vouchers etc. showing the cost of construction of the building; the landlord was also asked to bring documentary evidence relating to the date of completion of construction of the building. It is necessary to explain here why the date of completion of construction of the building was important. The Control Act, 1947 came into force on March 24, 1947. By S. 1(2) thereof, as it originally stood, it was not applicable to any premises the construction of which was not completed by March 24, 1947, and which was not let to a tenant before the enforcement of the Act. Later, there was an Ordinance (Ordinance No. XVIII of 1947) followed by an Act (Act L of 1947). by which enactment newly constructed buildings were brought, within the purview of the Control Act, 1947 by repealing S. 1(2) of the Act in so far as it affected buildings in Delhi and by introducing S. 7A and Sch. IV to the Act, we shall presently read S. 7A and the relevant provisions of Sch. IV. We may just state here that S. 7A laid down that the fair rent of newly constructed buildings shall be fixed according to the provisions set forth in Sch. IV. Buildings which were completed earlier than March 24,1947, had to be dealt with by the Civil Court under S. 7 of the Act. Under S. 7A read with Sch. IV, the Rent Controller had jurisdiction to fix the fair and standard rent in respect of buildings which were not competed before the commencement of the Act. Therefore, the Rent Controller had to determine the date of completion of the building in order to have jurisdiction under S. 7A of the Control Act, 1947.4. We have referred to the notice which the Rent Controller had directed to be issued to the landlord on August 12, 1948, fixing August 18, 1948, as the date for the hearing of the case. On August 18, the landlord made an application by means of a letter sent to the Rent Controller in which he asked for postponement of the case to some date in September. The case was postponed to August 26, 1948, but on that date the landlord again asked for an adjournment. Then on September 1, 1948, an application was made on behalf of the landlord, in which there was a reference to 14 tenants who had applied for fixation of standard rent for the shops in the Chemists Market. In this application the landlord stated that he himself had applied for fixation of standard rent under S. 7 of the Control Act, 1947 in the Court of the Subordinate Judge, Delhi and as those applications were pending, he prayed that the proceedings for determining the identical question of fixation of standard rent by the Rent Controller under S. 7A should be stayed. The printed record does not clearly show how and when tenants other than the 9 tenants who had originally applied for fixation of standard rent on July 30, 1948, had also applied for fixation of standard rent for the shops in their occupation. It is clear, however, from the application of the landlord dated September 1, 1948, that 14 tenants including some of those who had applied on July 30, 1948 had applied for fixation of standard rent for the shops occupied by them. On November 9, 1948, the Rent Controller wrote a letter to the landlord in which he referred to some enquiry held in his office on September 1, 1948 andthat day you promised to produce some papers to show that these shops were completed before March 24, 1947. As the case is unnecessarily being delayed, you are requested to appear in my office with all the necessary documents at 3 P. M. on Wednesday the 17th November, 1948. It may please be noted that no further adjournment will be possible. Your failing to comply with this notice, ex parte decision will beNovember 15, 1948 the Rent Controller again wrote to the landlord that on a representation made by the landlords representative, the date had been extended to November 19, 1948, and the landlord should produce all necessary documents relating to the building in question. The Rent Controller again reminded the landlord that there would be a final hearing on November 19. On that date, however, the landlord again made an application saying that as there were regular suits for the determination of the standard rent pending in the Court of the Subordinate judge, Delhi, the proceedings before the Rent Controller should be stayed. On November 26, 1948 the Rent Controller wrote to the landlord to the following effect :"As you have failed to attend my office personally on the fixed date and your attorney did not possess any information or documents regarding the newly constructed "Chemists Market", you are now directed to submit your written statement on oath, duly countersigned by your advocate, giving full details regarding the date of construction of the said building. Please note that your statement must reach this office before the 3rd December 1948."Then on December 3, 1948 the Rent Controller wrote to the landlord saying that he would be visiting the premises on December 5, 1948. On December 3, a telegram was sent on behalf of the landlord saying that he was out of station. On that date the Rent Controller recorded the following ordershops were first let out from 1st April, 1948.Note-The Advocate for the landlord was requested to tell the landlord that he must submit his statement in writing (countersigned by the Advocate) within the next 15 days whether he contends or does not contend that this building was completed after 24th March, 1947.The Advocate for the landlord gave an application asking for staying the proceedings as he had applied to the Sub-Judge for fixation of standard rent of the premises. He was told that I was not prepared to stay the proceedings unless he or his client were prepared to say on oath that the building was completed before the 24th March, 1947."On December 9, 1948 the Rent Controller again wrote to the landlord to the following effectam in receipt of your telegram dated the 3rd December, 1948.On 19th November, 1948, the last date of hearing, your Advocate Shri Jugal Kishore and your general Attorney Shri Kundal Lal were given definite instructions to see that your written statement, as to when the construction of the "Chemists Market" was started and when completed, was sent to me within 15 days. These instructions were later confirmed in writing vide this office No. R. C. 42/ Camp dated the 26th November, 1948. My instructions, however, have not been complied with so far and it is presumed that you are trying to evade the issue.I, however, give you another final opportunity and direct you to submit your written statement on oath within one week from the receipt thereof, showing the date of completion of construction of your building known as "Chemists Market" in Bhagirath Colony, Chandni Chowk, Delhi.Please take notice that your failure to comply with (torn) within the stipulated period will amount to disobeying the orders of this Court and the case will be referred to appropriate authorities for necessary action in thelandlord took no steps whatsoever to furnish any written statement. In these circumstances, the Rent Controller passed his final order on January 10, 1949. In that order he recited the facts stated above and ended up saying that though the landlord had been given sufficient opportunity, he had not made any statement in writing or otherwise and that the landlord was clearly trying to avoid the trial of the issue. The Rent Controller had inspected the building on December 12, 1948 and made local enquiries. He came to the finding that the shops in question were completed only in the beginning of 1948. He said :I inspected this building on 12th December, 1948 and made local enquiries when it transpired that the building (shops) was completed only in the beginning of 1948. The very look of the building also confirms this information. On the other hand no data has been placed before me by the landlord, his attorney or the advocate to show that the construction of the building was completed before 24th March, 1947. According to the admitted statement of the attorney the shops have been let out for the first time in 1948 and otherwise too his statement of 19th November, 1948 shows that the building had not been completed before 24th March, 1947. No completion certificate or house-tax receipts have been produced in support of this contention. It is, therefore, not understandable how it is claimed that the shops were completed before 24th March, 1947. The owner is knowingly avoiding to give a statement himself that the shops were completed before 24th March, 1947. Evidently because he realises that this is not true. It has also not been stated what use was made of these shops till January, 1948, when they were first let out if they had been completed before 24th March, 1947 as alleged.It is unbelievable that shops like these could remain unoccupied for nearly 9 to 10 months after completion. I am, therefore, convinced beyond a shadow of doubt that the construction of these shops was completed long after 24th March, 1947, and the fixation of their standard rent definitely falls within the scope of section 7A of the Delhi and Ajmer-Merwara Rent Control Act, 1947 (as amended). I, therefore, proceed to fix the rent accordingly".After taking into consideration the nature of the construction and the fittings, etc., and other relevant considerations, the Rent Controller fixed the valuation at Rs. 9-7-0 per sq. ft. of plinth area for working out the probable cost of the construction of the building. The cost of the land, he estimated at Rs. 275 per sq. yd. ; but he allowed only one-third of the estimate inasmuch as the building was one-storeyed and all the buildings in the vicinity were mostly three-storeyed. On these calculations, he held that the standard rent for all the shops in the building worked out at Rs. 335 per month including 10% for repairs but excluding house tax and charges for consumption of water and electricity. A calculation sheet was prepared fixing the standard rent for each of the shops including some shops which were vacant, an the aforesaid basis. The calculation sheet showed that the standard rent of 18 shops in the building varied from Rs. 10 per month to Rs. 50 per month.5. Against the order of Rent Controller dated January 10, 1949, nineteen appeals were taken to the District Judge. One of the points taken before the District Judge was that the Rent Controller had no jurisdiction to fix the standard rent inasmuch as the building had been completed before March 24, 1947. The learned District Judge dealt with this point at length, and held that the Rent Controllers finding on the question of jurisdiction was correct. As to fair rent, he held that though the building was single-storeyed, there was no reason why the landlord should not be allowed the full value of the land on which the building stood. Allowing full value for the land and having regard to the rent of premises in the neighbouring area the learned District Judge modified the order of the Rent Controller and fixed the standard rent of the building at Rs. 670 per month, viz., double of what was fixed by the Rent Controller. The learned District Judge passed his order on January 15, 1951.6. It appears that from the order of the District Judge, Delhi dated January 15, 1951, certain applications in revision were made to the Punjab High Court. Most of the applications were by the landlord, but one of them was by a tenant. These applications were heard together by the High Court. The High Court allowed the applications of the landlord and held in effect that the proceedings before the Rent Controller violated the principles of natural justice and were, therefore, bad and without jurisdiction. The High Court, it appears, travelled over a wide field and dealt with a number of questions, though its decision was based on the finding stated above. The first question which the High Court considered was whether S. 7A read with Sch. IV of the Control Act, 1947 prescribed a discriminatory procedure without a reasonable classification in respect of premises completed after March 24, 1947 and thus violated the guarantee of equal protection under Art. 14 of the Constitution. Along with this question was canvassed another connected question, viz., whether these cases would be governed by the law in force at the time of the decision given by the Rent Controller or by the law existing at the time when the District Judge heard the appeals. it may be here noted that the Constitution of India came into force on January 26, 1950, and at the date of the decision of the Rent Controller, Art. 14 of the Constitution was not in force. The High Court expressed the view that the law to be applied was the law in existence at the time when the District Judge decided the appeals. It further held that S. 7A read with Sch. IV of the Control Act, 1947 was violative of the guarantee of equal protection of laws under Art. 14 of the Constitution, there being no rational nexus between the classification made regarding premises old and new and the objects of the statute. Having given these two findings, the High Court said, however, that it would prefer not to base its judgment on these findings, because to do so might be giving retrospective effect to the Constitution. The High Court then went on to consider the further contention urged before it that in the proceedings before the Rent Controller there was a violation of the principles of natural justice inasmuch as all recognised principles governing tribunals which exercised quasi-judicial powers or follow a procedure subserving the orderly administration of justice had been disregarded. On this point the learned Judge, delivering the judgment of the Court, expressed himself as followsthe present case no evidence as to rent was called from the parties or recorded by the Controller nor was any opportunity afforded to the parties to adduce such or any evidence which they considered necessary to submit. The Controller made private enquiries and his order shows that he has based his decision on the cost of the building which he himself calculated without allowing the petitioner an opportunity to show that such calculation was wrong or its basis erroneous. Of course, there is no procedure prescribed by the Schedule and whatever procedure was followed does not subserve the orderly administration of justice. So that the determination is based on private enquiries, unchecked calculations and no evidence of the parties who were afforded no opportunity of proving their respectivetwo tenants are M/s. Dhawan and Co., and Firm Gokal Chand-Madan Chand. M/s. Dhawan and Co. had made an application for fixation of standard rent on June 14 1948. A similar application was made by Firm Gokal ChandMadan Chand on the same date, in the applications an averment was made that the flats were completed after March 24 1947, and that the tenants being without any accommodation and under the pressure of circumstances were forced to accept the exhorbitant rent of Rs. 360 per month in one case and Rs. 350 per month in the other. Both of them asked for fixation of standard rent under S. 7A of the Control Act, 1947. Both the landlord and the tenants appeared before the Rent Controller and made statements before him. The main question taken before the Rent Controller on behalf of the landlord was that the second-floor on which the two flats of the tenants were situated was completed before March 24, 1947, and therefore, no proceeding in respect thereof was maintainable under S. 7A of the Act. The Rent Controller went into the evidence adduced before him very carefully and came to the conclusion that though the ground-floor and the first-floor of the building were old, the second-floor was constructed some time in August, 1947. He, therefore, held that the second-floor was a new construction within the meaning of S. 7A of the Control Act, 1947 and he fixed the standard rent for each flat at Rs. 96-8-0. The matter was then taken in appeal to the District Judge. Again the main contention before the District Judge was that the Rent controller had no jurisdiction as the premises in question were not newly constructed. The District Judge dealt with this point in the followingpremises are two flats on the second floor of a large building belonging to the appellant, and the Rent Controller has found that these flats were constructed after 24th March, 1947. The record shows that the general attorney for the appellant admitted before the Rent Controller that only a temporary construction was in existence on the second floor before 24th March,1947, and that temporprary construction consisted of wooden. purlins with corrugated iron sheets and stone-slabs on top of them, subsequently, however, this, construction was brought down and proper flats were built with reinforced concrete roofs, and it is in evidence that the first tenant, who occupied one of the flats, did so in September, 1947 and a second tenant went into occupation in January, 1948. It is on this evidence abundantly clear that the premises or the flats now in dispute were in every, sense newly constructed premises and the Rent Controller was competent to fix the rent.We now come to Civil Appeal No. 171. The facts of this appeal are somewhat different. We have already stated that this appeal relates to two flats on the ground floor of plot No. 20. Block No. 13. Western Extension Area, Karolbagh. The tenant, who is the appellant before us, took the flats on a rent of Rs. 220 per month including tax on December 15, 1950. On May 15, 1951 he made an application for fixation of standard rent under S. 7A of the Control Act, 1947, on the ground that the rent charged was excessive and exhorbitant. The application was contested by the landlord. On December 7,1951, the Rent Controller fixed Rs. 150 per month as the standard rent inclusive of tax. The landlord filed an appeal to the District Judge which was dismissed on May 12, 1953. The landlord then filed an application in revision to the High Court and the High Court accepted the application on May 10, 1954. and remanded the case for a fresh trial. When the case came hack to the Rent Controller, the landlord made an application to the Rent Controller to the effect that S. 7A read with Sch. IV of the Control Act, 1947, was rendered unconstitutional and void on the coming into force of the Constitution of India. Apparently, this print was taken in view of the judgment of the Punjab High Court dated August 26, 1954 already discussed in the other appeals. On May 30, 1955, the Rent Controller held, on the basis of the aforesaid decision, that S. 7A read with Sch. IV if the Control Act, 1947, was unconstitutional and therefore the application was not maintainable. Accordingly, he dismissed the application, The matter was then taken to the District Judge in appeal. The learned District Judge who was bound by the decision of the Punjab High Court also held that S. 7A of the Control Act, 1947, was unconstitutional and therefore the application was not maintainable. The tenant-appellant then made an application under Art. 227 of the Constitution to the Punjab High Court. That application was summarily dismissed on March 7, 1956.

Reasoning:
We agree with these observations of the Full Bench, and we further accept the view expressed by it that the criteria for the fixation of standard rent for both new and old buildings under the Control Act, 1947 are not substantially different. The minor differences that exist in the matter, which have been adverted to in the judgment of the High Court, can be justified on the grounds of (a) difference in the cost of construction of old and new buildings, (b) difference in the rate of return on investments made in building houses before and after 1947, (c) the need to encourage the building of houses to meet the acute shortage of accommodation in Delhi after 1947, and (d) the opportunity presented of charging excessive rent after 1947. Perhaps, it is also necessary to emphasise again that the provisions in Schedule IV of the Control Act, 1947 do not give an arbitrary power to the Rent Controller, paragraph 8 of the Schedule requires the Rent Controller to state in writing his reasons for fixing the standard rent. Paragraph 4 states that in fixing the standard rent, the Rent Controller shall take into consideration all the circumstances of the case including any amount paid or to be paid by the tenant by way of premium or any other like sum in addition to rent. Paragraph 7 gives the Rent Controller power to require the landlord to produce any book of account, document or other information relating to the newly constructed premises, to enter and inspect such premises after due notice, and to authorise any officer subordinate to him to enter and inspect any such premises after due notice. Paragraph it provides, for an appeal to the District Judge any person aggrieved by an order of the Rent Controller. These provisions clearly indicate that the power given to the Rent Controller is not an arbitrary power. The power has to be exercised by the Rent Controller on a judicial consideration of all the circumstances of the case. We think that the High Court was in error in the view it expressed that no reasonable procedure is prescribed by the provisions of Sch. IV and the Rent Controller is at liberty to do whatever heanybody is to blame for the ex parte order of the Rent Controller, it is the landlord himself. It appears from the order of the Rent Controller that the attorney or advocate of the landlord did appear on several dates and even made a statement as to the letting out of the building in question, but too no other part in the proceedings except asking repeatedly for adjournment. The Rent Controller was not far wrong when he said that the landlord was bent upon avoiding a trial of the issue before the Rent Controller on the ground that he had made applications under S. 7 to the Subordinate Judge, Delhi, for fixation of standard rent. In view of the recalcitrant attitude which the landlord adopted the Rent Controller did his best in the circumstances. He took into consideration such relevant circumstances as the cost of the land, cost of construction, cost of fittings, the open area in front of the shops, cost of repairs etc. The learned District Judge also took into consideration the return which the landlord could reasonably expect on his outlay and also the rent of other premises in the area. Taking these additional circumstances into consideration, the District judge doubled the standard rent which the Rent Controller had fixed. It does not appear from the order of the learned District Judge that any objection was pressed before him on the ground that in the actual proceedings before the Rent Controller there was a violation of the principles of natural, justice, though in paragraph 7 of the grounds of appeal it was stated that the procedure adopted by the Rent Controller was contrary to the provisions of law etc. Such a ground appears to have been seriously pressed for the first time in the revision applications to the High Court.11. Some grievance has been made before us of the circumstance that in his letter dated December 3, 1948 the Rent Controller said that he would inspect the building on December 5, 1948. He, however, actually inspected the building on December 12, 1948 as his order shows. Our attention has been drawn to paragraph 7(b) of Sch. IV and it has been contended that the inspection was made without notice to the landlord. This, it is stated, has vitiated the entire proceedings. This argument might have had some force; but for the attitude adopted throughout the proceedings by the landlord. On the very date on which the Rent Controller intimated to the landlord that he would visit the building on December 5, 1948, the landlord sent a telegram purporting to be on his behalf stating that he was out of station. The Rent Controller then noted an order on that very date stating that the advocate for the landlord gave an application for staying the proceedings. This application was rightly refused by the Rent Controller. In these circumstances we do not think that the landlord can make any complaint that the inspection was without notice or that he had no opportunity of being present at the time of the inspection. It is obvious that from the very, beginning the landlord had taken up an attitude of non-cooperation in the proceedings before the Rentthe cases before us the tenants had stated the reasons, which were common to all, why they had to submit to excessive and exhorbitant rate of rent charged by the landlord. It was, we think, open to the Rent Controller to accept those reasons as prima facie good reasons for proceeding to make an enquiry to fix the standard rent and in that enquiry it was open to the Rent Controller to give the necessary finding that the rent charged by the landlord was excessive. The final order of the Rent Controller shows without doubt that he was satisfied that the rent charged by the landlord was exho bitant and excessive. We are unable to hold that in these circumstances there has been any contravention of para. 2 of Sch. IV of the Control Act,is clear from S. 7A and the provisions of Sch. IV that the Rent Controller has to fix the standard rent of newly constructed "premises" if the condition stated in para. 2 of Sch. IV is satisfied. The word "premises" as defined in S. 2 of the Act means "any building or part of a building which is, or is intended to be, let separately for use as a residence or for commercial use or for any other purpose etc." Each shop let out or intended to be let out separately is therefore "premises within the meaning of the Control Act, 1947. It may, therefore, be correct to say that it was not necessary for the Rent Controller to fix the standard rent for vacant shops. It is obvious, however, that for shops which had been let out to tenants the Rent Controller had to take into consideration the cost of the entire building, value of the land, the fittings etc. In other words he had to take the entire building into consideration for the purpose of fixing the standard rent of the shops in the building let out to various tenants. That being the position, we do not consider that the proceedings before the Rent Controller were rendered abortive merely because the Rent Controller also fixed the standard rent for some of the vacant shops. For the purpose of these appeals, the standard rent fixed for the vacant shops may well be ignored : that will not affect the rent fixed for the shops which had been let out tois, we think, too late in the day for the landlord to contend that some of the appellants had not applied for the fixation of standard rent. In any view of the matter, the landlord has not placed sufficient materials before us in support of that contention. We may point out here that M/s. Narang Medicine Co., appellant in Civil Appeal No. 182 of 1958, did not join in the application made on July 30, 1948. Yet we find from the record that a copy of the letter which the Rent Controller wrote to the landlord on November 9, 1948, was sent to M/s. Narang Medicine Co. As we have earlier pointer out the very petition of the landlord dated September 1,1948, shows that many were than 9 tenants had applied for fixation of standard rent for their shops in Chemists Market, Bhagirath Colony. Therefore, we are unable to uphold the contention of the landlord that the Rent Controller had fixed the standard rent of some of the shops tenants whereof had not applied for the fixation of the standardthe Rent Controller had wrongly decided the fact and assumed jurisdiction where he had none, the matter would be open to reconsideration in revision. The High Court did not, however, go into the evidence, nor did it say that the finding was not justified by the evidence on record. The High Court referred merely to certain submissions made on behalf of the landlord and then expressed the opinion that what was done to the second floor was mere improvement and not a new construction. We think that the High Court was in error in interfering with the finding of fact by the Rent Controller and the District Judge, in support of which finding there was clear and abundant evidence which had been carefully considered and accepted by both the Rent Controller and the Districtconsider it unnecessary to determine the effect of the aforesaid saving clause in the present appeal. Neither the Rent Controller, nor the District judge, nor the High Court considered the effect of the saving clause. The application of the appellant was dismissed on the simple ground that S. 7A read with Sch. IV of the Control Act, 1947 was unconstitutional. We consider that that ground is not correct and the application of the tenant-appellant for fixation of standard rent trust now be determined in accordance with law. It would be for the competent authorities to consider now the effect of S. 46 ofthe Delhi and Ajmer Rent Control Act, 1952 or of any other law bearing on the question which may have come into existence since then.