Banatwala & Company vs L.I.C.Of India & Anr

Short facts leading to this appeal are as follows -

2. The appellant is a firm of Advocates and Solicitors, and is a tenant in possession of 5th floor of a seven storey building, situated at 269 D.N. Road, Fort Mumbai owned by the first Respondent, L.I.C. L.I.C. is a statutory corporation constituted under the Life Insurance Corporation Act, 1956. The area under occupation of the appellant is 1289.16 sq. feet (equivalent to 113 sq. metres). The petitioner is a tenant of these premises since 1st August, 1988 under an agreement of lease which has been extended from time to time. It is relevant to note that there are no proceedings of eviction filed by the respondent No. 1 against the appellant. The second respondent is the Regional Manager (estates) of L.I.C.

3. The respondent No. 2 revised the monthly rent of these premises suddenly by his letter of 14th July, 2004 from Rs. 6,891/- to Rs. 39,069/-, including Municipal taxes and miscellaneous charges. The appellant filed a Writ Petition in the Bombay High Court being Writ Petition No. 2266 of 2004 to challenge the increasing of rent as arbitrary. The respondents made a statement in the High Court that if the petitioner abides by clause IV (e) of the lease agreement between the parties and pays increased rent as provided therein, the respondents will not enforce the increase in the rent that was proposed through letter dated 14.7.2001. Thereupon the writ petition was withdrawn. Subsequently, the respondents sent a reduced bill of Rs. 9144/- per month which included basic rent of Rs. 6181/- plus municipal taxes 3 and water charges of Rs. 355/- and misc. charges of Rs. 100/-. We place the above clause IV (e) on record. It reads as follows:-

5. The monthly rent for the premises, however continued to be uncertain.

The respondents increased the rent for the premises once again in March, 2008 to 4 Rs. 8689/-. In April, 2008 they demanded rent of Rs. 25,063/- on the basis that the rateable value of the building had been raised by the Mumbai Municipal Corporation from the month of April, 2006 onwards from Rs. 17,895/- to Rs. 1,21,805/-. The appellant was called upon to pay the arrears of rent also from April 2006 amounting to Rs. 8,89,503/-.

6. The appellant therefore asked for the break up of the rent bill by their letter dated 2.4.2008. Since no reply was received, appellant filed an Application (registered as RAN application No.24/SR/08) under Section 8 (3) of the MRC Act in the Court of Small Causes for fixation of standard rent, and also filed an application for fixing interim rent. Respondents in their turn challenged the jurisdiction of the Small Causes Court to entertain the proceeding, and contended that the suit premises were public premises covered under the Public Premises Act, and the MRC Act did not apply to them. They filed an application (exhibit 14) seeking a decision on that issue as a preliminary issue. The Small Causes Court, vide its order dated 30.3.2009, rejected this application Exhibit 14 and held that the said Standard Rent Application was maintainable under the provisions of MRC Act. Being aggrieved by that order, the respondents filed a Writ Petition invoking Article 227 of the Constitution of India in the Bombay High Court bearing Writ Petition No. 5023 of 2009.

8. The learned counsel for the appellant submitted that under Section 3 (1) (a) of the MRC Act, only the premises belonging to the Government or a local authority are exempted from the application of the Act. The MRC Act covers five subjects viz. (i) control of rent, (ii) repairs of certain premises, (iii) eviction, (iv) encouraging the construction of new houses by assuring of fair return on the investment to the landlord, and (v) matters connected with the aforesaid purposes.

A tenancy is created as a result of an agreement between the landlord and a tenant. Since the premises owned by the landlord are leased out to the tenant by virtue of the agreement between the parties, the agreement is normally called a `lease deed'. To put it in the words of Prof. P.F. Smith "The relationship of landlord and tenant arises where one person, who possesses either a freehold or leasehold property interest expressly or impliedly grants to another, by means of a contract, an estate in that property which is less than the freehold interest or for a shorter duration than the leasehold interest of the grantor, as the case may be."

(iii) eviction, (iv) encouraging the construction of new houses by assuring fair return of investment by the landlord, and (v) matters connected with the purposes mentioned above. Section 2 of the act gives the applicability of the act. Sub-

36. The question therefore to be examined is as to whether the two legislations occupy the same field. If they do not, then there is no repugnancy.

(emphasis supplied) Yardstick for Standard Rent:-

Reply on behalf of L.I.C -

Consideration of rival submissions The issue with respect to maintainability of the Standard Rent Application and the question of conflict with the provisions of the Public Premises Act-

On ouster of the jurisdiction of the Civil Courts-

65. Same is the position with respect to the Labour Laws in various States.

Expectations from Public Bodies -

On the relevance of the Guidelines -

The guidelines dated 30.5.2002 are not directions under section 21 of the LIC Act.

70. It was submitted on behalf of the respondents that if the appellant or the tenants are aggrieved by the fixation of the rent, their remedy is to invoke the writ jurisdiction of the High Court. In making this submission, the respondents are ignoring that the writ jurisdiction is a discretionary jurisdiction. Besides, normally oral evidence is not recorded while exercising the writ jurisdiction. Although part of the evidence to be examined in the process of rent fixation would be documentary, such as the provisions of the contract between the parties, there would also be many other factors which may require oral evidence, particularly with respect to the comparable properties. An appropriate remedy, forum and procedure are therefore necessary in the interest of fairness and proper adjudication. That apart, there is no reason to insist upon such an interpretation which will deny to the tenants of the 68 public premises, a remedy and a forum which are otherwise available to the tenants under the MRC Act,.

71. In view of what is stated above, the interpretation as canvassed by the respondents will deny the appropriate remedy to the petitioner and the like tenants, to have the rent of their premises being fixed by filing a Standard Rent Application, and also to get the essential services restored in the event of any difficulty. There is no reason to accept any such interpretation because as stated above there is no conflict between this provisions of the MRC Act with those under the Public Premises Act, when it comes to fixation of standard rent and restoring the essential supplies.

Otherwise it will expose the provisions of Public Premises Act to the vires of unreasonableness also. The interpretation canvassed by the respondents is not in consonance with the welfare state that is contemplated under the Indian Constitution. Accordingly, we hold that the impugned judgment of the learned Single Judge of Bombay High Court does not lay down the correct position in law.

73. Hence, we pass the following order-

(a) This appeal is allowed, and the order dated 8.9.2009 passed by the learned Single Judge of Bombay High Court, in Writ Petition No. 5023/2009 filed by the respondents is set aside. The said Writ Petition shall stand dismissed.

(b) The order dated 30.3.2009 passed by the Court of Small Causes, Mumbai rejecting respondents' application objecting to the maintainability of appellant's Application No.RAN24/SR/08 for fixation of Standard Rent is upheld. The said 70 Standard Rent Application will now be heard and decided on its merits and in accordance with law.

(c) In the facts of this case, there will be no order as to costs.