Case: Karnani Properties Limited Vs. Augustin

2. In order to appreciate the points of law at issue between the parties, it is necessary to state the relevant facts shown of all details relating to the basic rent and the standard rent fixed at different stages of the proceedings. Those details are not necessary for the determination of these appeals. The undisputed facts are that the appellant is seized and possessed of several municipal holdings collectively known as the Karnani Mansions, 25-A, Park Street, together with adjoining premises situated at the junction of Park Street and Free School Street in the city of Calcutta. There are about 210 flats of different types and shop-rooms in the said Karnani Mansions let out separately to tenants. The tenant in each of the three cases leading up to the appears in this Court had been inducted by the predecessor-in-title of the appellant. In each case the tenancy consisted of a single room, a bath and a covered verandha. The tenant has also the use of a number of fans, plug points, towel racks, besides a basin, a commode and a glass shelf. The landlord also supplies without any additional charge electrical energy for consumption by the tenant for the use of lamps, fans, radio, ovens for cooking, for ironing, laundering and refrigerators. The landlord is also responsible for repairs of the electric installations and sanitary fittings, as also for supplying service of night guards, sweepers, liftmen etc. The tenant in each case applied before the Rent Controller of Calcutta under S. 9 read with Schedule A of the Act for fixation of standard rent in respect of the flat occupied by the applicant. The landlord resisted the application on the ground, inter aria, that the Rent Controller was not authorised by the Act to deal with the tenancies in question because the premises were outside the scope of the Act; that there had been a great increase in the cost of maintenance, as also of repairs and replacements of electric and other installations, that there had been a considerable enhancement of the charge for electricity supplied by the Calcutta Electric Supply Corporation Ltd., and of Government duty on the same; that if the Court held that these premises were governed by the provisions of the Act, the landlord was entitled to proportionate increase in respect of those charges; that the Act does not make specific provision for increasing the rent with reference to the charges aforesaid would also point to the conclusion that the Act was not intended to be applied to the tenancies in question. The Rent Controller after having inspections made of the premises in question fixed a standard rent in accordance with the rules laid down in Schedule A to the Act. The rent thus standardized was to take effect from September 1, 1950. The appellant preferred an appeal to the Chief Judge of the Small Cause Court, Calcutta, against the aforesaid order of the Rent Controller. The Appellate Authority allowed the landlords appeal in part by settling the standard rent at a higher figure than that arrived at by the Rent Controller by applying the provisions of cl. (g) of S9. The Appellate Authority aforesaid negatived the landlords contention that the premises in question providing the special service and amenities aforesaid were outside the ambit of the Act. It gave the landlord relief in respect of the higher charges for electric consumption and Government duty aforesaid. The standard rent thus fixed by the Appellate Authority was in excess of the original rent agreed between the parties. The tenant in each case moved the High Court of Calcutta in its revisional jurisdiction . The learned single Judge of the High Court who heard the revisional applications allowed them in part, giving effect virtually, though not entirely, to the decision of the Rent Controller and holding that cl. (g) of S.9 of the Act was not attracted to the facts and circumstances of the cases before the Court. He relied upon a Division Bench ruling of the same Court in the case of Residence Ltd. v. Surendra Mohan, AIR 1951 Cal 126   (A), which, it is agreed at the Bar, is on all fours with the facts and circumstances of the present case. After the rejection by the High Court of the appellants petition for a certificate under Art.133 of the Constitution, the appellant obtained from this Court special leave to appeal on common questions of law. Hence the appeals in each of these three cases have been heard together.

Court's reasoning:
4. Adverting to the first point raised on behalf of the appellant, we have to notice an argument which was raised for the first time before us, namely, that the definition of premises in S.2(8) would not in terms apply to the tenements in question and that if any provisions of the Act could be attracted to these cases, cl. (3) of S.2 defining hotel or lodging house could more appropriately be applied to the tenancies in question. As this point in this form has not been raised in the Courts below or even in the statement of the case in this Court, we refuse to go into that question, even assuming that the controversy thus raised does not require any fresh findings of fact. These cases have not been fought on that ground and, in our opinion, it is too late to raise for the first time a controversy in that formIt will serve no useful purpose to go into the ramifications of the definitions in the different pieces of legislation which deal with the same subject matter. We have to construe the Act as it stoodIt is clear from the terms of the clause quoted above that the landlord was to place at the disposal of the tenants not only electric installation including fans but also electric current to be consumed in the use of those installations, etc., besides radio and electric stoveIt is true that none of the cls. (a) to (f) of S.9 has any reference to these considerations. Clause (b) makes a specific reference only to increase in municipal taxes, rates or cesses. But then there is the residuary cl. (g)and the question whether that clause applies to the present cases will have to be discussed separately when the second point in controversy will be taken up for consideration. It is enough to point out at this stage that the legislature was conscious that contingencies may arise which would not be covered by any of the specific cls. (a) to (f) of S. 9 which is the operative section in the Act relating to fixation of standard rent.Under this head the question reduced itself to this : whether if by a stipulation between the landlord and the tenant the landlord agrees to provide for additional amenities like electric power for consumption and such other facilities, the case is taken out of, the operation of the Act. The Act is intended to make better provision for the control of rents of premises. It has defined premises in very wide terms, as pointed out above. Hence it is difficult, it not impossible, to accept the contention that the legislature intended the provisions of the Act to have a limited application depending upon the terms which an astute landlord may be able to impose upon his tenants. In order fully to give effect to the provisions of the statute, the court has to give them the widest application possible within the terms of the statute. Having those considerations in view, we do not think that the supply of the amenities aforesaid would make any difference to the, application of the Act to the premises in questionIn view of these considerations we overrule the first contention raised on behalf of the appellant6. But the second contention raised on behalf of the appellant, in our opinion, is well foundedIt will appear from the terms of the contract between the landlord and the tenant in each case, particularly from cl.(1) of the agreement quoted hereinbefore that the landlord has not only agreed to supply electric and the other installations but also electric power and other services for which no separate payment has been stipulated. It has not been denied, - as a matter of fact, counsel for the tenants - respondents clearly admitted - that the rent fixed in each case included payment for those additional amenities and services, though the amount in respect of them have not been separately shown in the agreement. The rent fixed was a consolidated sum for all those amenities and services, as is clearly stated in Para 1 of the agreement set out above. But even after making that concession thelearned counsel for the respondent strongly relied upon the decision of a Division Bench of the Calcutta High Court given on letters Patent Appeal from a judgement of a single Judge of that Court, in AIR 1951 Cal 126   (A).It has been laid down in that case that the Act is applicable to a tenancy the terms of which included such additional conveniences and facilities as have been provided by the landlord in these cases. We have already indicated that we agree with that conclusion. But the case also lays down the proposition that what is paid as rent for the flat does not include any payment for the additional facilities and conveniences provided by the landlord for the use of the tenantWith all due deference to the views thus expressed by that very experienced and learned Judge, we cannot agree that those observations correctly represent the true legal position. As a matter of fact, the learned Judge has referred to with approval the judgments of the Appeal Court and the Kings Bench Division in the cases mentioned above to show that the term rent is comprehensive enough to include not only rent in the narrower sense of the term as ordinarily understood but also payment in respect of the additional conveniences and amenities.The two parts of the observations quoted above cannot be reconciled unless it can be said that the learned Judge is using the word rent, not in the same sense but in its different connotations according to the context. If the learned Judge used the word rent in its comprehensive sense in which the Act must be construed as having used that term, this part of the judgment cannot be said to be against the appellants contention that the standard rent must be fixed with reference to all the constituents which made up the lump sum as fixed in each case as rent. This position emerges not only from a consideration of the legal position in contemplation of the Act, but also from the terms of the agreement between the parties, as indicated above. In view of our conclusion that the residuary cl. (g) applies to the terms of the tenancy in these cases, it follows that the decision of the Appellate Authority was more in consonance with the provisions of cl. (g) than that of the Rent, Controller or of the High Court.As the figures arrived at by the Appellate Authority have not been challenged before us, we would direct that the orders passed by it should be restored and those of the High Court and of the Rent Controller set asideClause (a) cannot apply because it cannot be said that There is no cause for the alteration of the rate of standard rent as determined according to the schedule for any of the reasons mentioned in the following clauses, in accordance with the provisions of Sch. A. It has not been denied that electric charges and the Government duty thereon have been enhanced and that the Municipal taxes also have been increased. Clause (b) also in terms cannot apply because it does not by itself entirely cover the cases in hand. There has been increase not only in Municipal taxes but also in electric charges, Government duty on electric consumption and in the cost of the other services and amenities specially provided for by the agreement between the parties. Clause (c) is out of the way of the parties because there is no question of addition, alteration or improvement in the premises. Clause (d) is similarly inapplicable because it is nobodys case that any furniture not already provided by the landlord has been supplied to any of the premises for the use of the tenant. Clause (e) also has not been claimed by either party to be applicable because the special circumstances contemplated therein are not found in these cases. Clause (f) is clearly inapplicable because the premises had been constructed admittedly much earlier than December 31, 1949. The only remaining clause is cl. (g) which is in these terms : -"Where no provisions of this Act for fixing standard rent apply to any premises, by determining the standard rent at a rate which is fair and reasonable".