Case: M/s. Raval &amp; Company Vs. K.G. Ramachandran &amp; Others

1. The appellants are the tenants of a property bearing door Nos. 16 and 17 of the Poonamallee High Road in the city of Madras. They became tenants of this building in May 1929 when the property was with one of the predecessors in title of the present landlords, who are the respondents in these appeals. Though the appellants became tenants in 1929 a registered lease deed came into existence only in 1935 under which the lease was to run upto 1-5-1969. The lessee was entitled to renewal on the same terms and conditions for another period of fifteen years. The monthly rent agreed upon was Rs.225/- and a sum of Rs.235/- was payable as an annual contribution towards repairs and Rs.220/- towards public charges and taxes. In 1949 the parties mutually agreed that the tenants were to pay a 25 per cent increase in rent and also certain other amounts. The present landlords purchased the property in 1962 and soon after filed an application under Section 4 of the Madras (Now Tamil Nadu) Buildings (Lease and Rent Control) Act, 1960 for fixation of fair rent. Thereupon the tenants filed Writ Petition No. 1124 of 1963 seeking to restrain the landlords from proceeding with that petition. The learned single Judge who heard the petition felt that in view of a long series of decisions of Madras High Court under the various Rent Control Acts in force in Madras that they applied also to contractual tenancies in the matter of payment of rent as well as eviction, the matter should be considered by a Full Bench in view of the decisions of this Court in Rent Control cases from certain other States.2. The Full Bench after an elaborate consideration came to the conclusion that the Act controls both contractual as well as statutory tenancies. that it is a complete code, and enables both landlords and tenants to seek the benefit of fixation of fair rent, whether a contractual tenancy prevails or it has been determined. Thereafter the matter again came up before the same learned single Judge who, applying the provisions of the Act to the facts of the case held that the Act did not apply to the premises in question. On appeal by the landlords a Division Bench of the High Court held that the premises were not exempted from the provisions of the Act and the Rent Controller has therefore jurisdiction to entertain and dispose of on merits the application for fixation of fair rent filed by the landlords. These two appeals are against the judgments of the Full Bench (reported in 1966-2 Mad LJ 68 = (AIR 1967 Mad 57  ) (FB)) and the Division Bench respectively.

Reasoning:
Apparently it realised that the pegging of the rents at the 1940 rates had discouraged building construction activity which ultimately is likely to affect every body and therefore in order to encourage new constructions exempted them altogether from the provisions of the Act. It did not proceed on the basis that all tenants belonged to the weaker section of the community and needed protection and that all landlords belonged to the better off classes. It confined the protection of the Act to the weaker section paying rents below Rs.250/-.It is clear, therefore, that the Madras Legislature deliberately proceeded on the basis that fair rent was to be fixed which was to be fair both to the landlords as well as to the tenants and that only the poorer classes of tenants needed protection. The facile assumption on the basis of which an argument was advanced before this Court that all Rent Acts are intended for the protection of tenants and, therefore, this Act also should be held to be intended only for the protection of tenants breaks down when the provisions of the Act are examined in detail. The provision that both the tenant as well as the landlord can apply for fixation of a fair rent would become meaningless if the fixation of fair rent can only be downwards from the contracted rent and the contract rent was not to be increased. Of course, it has happened over the last few years that rents have increased enormously and that is why it is argued on behalf of the tenants that the contract rents should not be changed. If we could contemplate a situation where rents and prices are coming down this argument will break down. It is a realisation of the fact that prices and rents have enormously increased and therefore if the rents are pegged at 1940 rates there would be no new construction and the community as a whole would suffer that led the Madras Legislature to exempt new buildings from the scope of the Act. It realised apparently how dangerous was the feeling that only "fools build houses for wise men to live in". At the time the 1960 Act was passed the Madras Legislature had before it the precedent of the Madras Cultivating Tenants (Payment of Fair Rent) Act, 1956. That Act provides for fixation of fair rent. It also provides that the contract rent, if lower, will be payable during the contract period. Even if the contract rent is higher only the fair rent will be payable. After the contract period is over only the fair rent is payable. The Madras Legislature having this Act in mind still made only the fair rent payable and not the contract rent if it happens to be lower. It is clear, therefore, that the fair rent under the present Act is payable during the contract period as well as after the expiry of the contract period.We have then to deal with Civil Appeal No. 1201 of 1970. The learned Single Judge considering that as the total amount payable annually in respect of these premises was Rs.5,032/-,which makes the rent payable to exceed Rs.400/- a month, the building was outside the scope of the Act and therefore the petition for fixation of fair rent does not lie. (This provision was removed by an Amending act of 1964). The learned Judges of the Division Bench on the other hand held that the agreement of the year 1949 between the landlord and the tenant by which the rent was increased was one in variation of a written contract and therefore evidence of it is barred under Section 92 of the Evidence Act. Clearly any variation of rent reserved by a registered lease deed must be made by another registered instrument. We are not able to accept the argument of Sri K. S. Ramamurthy on behalf of the tenants that the agreement of 1949 was one by the landlord to give up his right to apply for fixation of fair rent in consideration of the additional rent agreed to be paid by the tenant and is, therefore, not covered by Section 92 of the Evidence Act. The correspondence between the parties makes it clear beyond doubt that the agreement was to pay increased rent. If this agreement is left out of account the rent payable is below Rs.400/- a month, and, therefore, the decision of the Division Bench is correct.In view of our finding earlier that this case should be decided on the basis of the monthly rent being below Rs.400/- this argument does not fall to be considered.