Case: Raja Bahadur Motilal Bombay Mills Ltd.And Another Vs. M/S. Govind Ram Brothers (P) Ltd., Andanother

2. The material facts are as under:A big compound measuring 11,150 sq. yards at 156, Tardeo Road, Bombay, belonged to Raja Bahadur Moti Lal Mills Ltd., Bombay, appellant No. 1. The Mills were shifted from these premises in the year 1930. In 1932, the whole of this estate including the structures standing on a part of it, was let out to Sound Studios Ltd. Between the years 1932 and 1940, some part of it was sub-let by Sound Studios to Sheraj Ali, who was the proprietor of M/s. Famous Cine Laboratory and another part of Neon Signs (India) Ltd., and the rest of the estate continued to be with Sound Studios. Thereafter, Sound Studios went out of the picture and the whole estate was let out to National Studios Ltd. on October 23, 1940 at a monthly rent of Rs. 1700/- for a period of two years.3. In July, 1941, National Studios surrendered their lease and Sheraj Ali became a direct tenant under appellant 1 in respect of the premises in his possession, called for the sake of identification, 983/1 (whole) and 983/2 (Ground floor). On December 1, 1941 and again in November, 1942, Sheraj Ali took on rent additional portions of this estate so that his original rent, which was Rs. 400/-, was first increased to Rs. 600/- and then to Rupees 700/- and thereafter in November, 1942 to Rs. 875/-. By November, 1947, Sheraj Ali was paying Rs. 1200/- per month as rent for the premises demised to him including some new structures which had been built.4. Sheraj Ali had taken a loan from M/s. Govind Ram Bros Ltd., Respondent 1 on the security of his Film Studio Equipments. He failed to repay the loan. Thereupon Respondent 1 instituted a suit for recovery of the amount and obtained a decree from the High Court on February 27, 1948. As a result of the High Courts decree, the right, title and interest of Sheraj Ali in the mortgaged property were assigned to Respondent 1. Respondent 1, in consequence, took a fresh lease on March 19, 1948 from appellant No. 1 of the properties (called for identification) 983/1 to 983/12, which were in the tenancy of Sheraj Ali, at a contractual rent of Rs. 1228/- p. m. On the same date, Respondent 1 executed another lease in respect of three rooms in the same premises (marked for identification as) 984, in favour of appellant 1, on a monthly, rent of Rs. 750/-. Respondent 1 failed to pay the contractual rent, regularly, which fel into arrears which were not cleared despite the pressing demands made by the Receiver. On March 13, 1954, the Receiver wrote to Respondent 1 threatening to take legal proceedings for the recovery of the rent. This Receiver who is now appellant No. 2, had been appointed by the High Court in Suit No. 454 of 1949 instituted by appellant 1 against the Insurance Company.5. On April 4, 1954, two applications were failed in the Court of Small Causes by Respondent 1 for fixation of standard rent in respect of the premises comprised in the said two leases : one application, R. A. N. 983/54 relates to properties 983/1 to 983/12, and the other (R.A.N.984) to premises 984. It was alleged in the applications that since on September 1, 1940, the entire estate, including the properties in question, had been let out on a monthly rent of Rs. 1700/-, standard rent of the premises in question should be fixed on the basis of apportionment. In particular, it was pleaded that fair rent of 983/1 to 983/12 should be 1/8th of Rs. 1200/- which was later corrected as Rs. 1700/-. On the same basis it was alleged in the second application that fair rent of premises 984 should be Rs. 75/- p. m.6. The appellants resisted these applications and averred in R.A.N. 983/54 that several entirely new structures had been built and substantial alterations made in most of these structures between the years 1940 and 1948, as a result whereof the property had lost its identity, and consequently, fair rent could not be fixed on apportionment basis.7. On June 11, 1958, Respondent 1 made an application for amendment of the Standard Rent Application (R.A.N. 983/54) for adding an alternative ground based on the value of the land and cost of construction so that in the event of the Court holding on the preliminary issue in favour of the appellants, the standard rent could be fixed on the basis of the evaluation of the land and the construction. This application was disallowed.8. On July 30, 1958, Respondent 1 made on application for amendment of his R.A.N. 984/ of 1954 on lines similar to that in R.A.N. 983/54. It was also dismissed by an order dated July 31, 1958.9. At the stage of arguments on December 4, 1958, Respondent 1 moved another application for amendment and addition of plea that they were the owners of the structures in premises 983/10, 983/11 and 983/12. The second amendment was not sought to be made in the other application R.A.N. 984/1954 relating to property 984. This prayer was also declined.10. The trial Court (Samson J.) by its judgment dated April 2, 1959, found that the premises in question on account of structural alterations had undergone such a change that they could no longer be identified with the property that existed in September, 1940 and that the mode of determining rent by apportionment was not available to the tenants. It the result he dismissed the applications, adding "there is no sufficient material to ascertain the standard rent in any other way".11. Against those orders, Respondent 1 filed revision petition under S. 127(3) of the Act before the Revisional Court of Small Causes, Bombay, which accepted the same, set aside the order of the trial Judge, allowed the amendment and remanded both the application for fixation of fair rent to the trial Court.12. Against this remand order, dated August 8, 1960 of the Revisional Court, the appellants preferred two Civil Revisions to the High Court of Bombay.13. During the pendency of those revisions, the trial Court allowed the amendment and proceeded to decide the entire matter afresh. These facts were brought to the notice of the High Court, which, however, dismissed the revision petitions by a judgment dated February 3, 1961 holding that the first Revisional Court had, in fact, remanded the entire matter for trial de novo, after rightly allowing both the amendments.14. After the remand, the trial Court by its judgment, dated April 25, 1961 held that except 983/10, 983/11 and 983/12, which were new structures, there was no change of identity in the rest of the properties i.e. 983/1 to 983/9 that the new structures 983/10, 983/11 and 983/12 belonged to Respondent 1 who was consequently, liable to pay rent only for the land underneath; that the cost of repairs of the properties 983/8 and 983/9 after they had been destroyed by fire, was mainly borne by Respondent 1, the landlords contribution being Rs. 8,500/-, only. Applying the principle of apportionment, it fixed the standard rent of the properties 983/1 to 983/12 at Rs. 400/- p.m. subject to permitted increases after 1954.15. Regarding the premises 984 (in R.A.N.984/54) the trial Court gave a return on the investment of Rs. 40,000/- made by the landlord inclusive of the cost of structure and the value of land underneath at Rs. 30/- per sq. yard (as that of 1940) and fixed the standard rent at Rs. 386/- p.m. subject to permitted increases after 1946.16. Aggrieved by these orders of the trial Court, appellants and Respondent 2 filed two revision applications under Sec. 129(3) to the Revisional Court of Small Causes which by its judgment dated September 30, 1964 substantially upheld the findings of the trial Court, inter alia, with the exceptions : (i) that the ownership of the new structures 983/10, 983/11 and 983/12 vested in Appellant 1, who was entitled to get a fair return on that investment; (ii) that the value of the land "married" to the new structures 983/10, 983/11 and 983/12 and 984/54 should be taken at Rs. 50/- per sq.yd. i.e as of 1948 and not as of 1940 as had been done by the trial Court on remand. In the result, the standard rent in RAN 983 was raised to Rs. 981/- and in RAN 984 to Rs. 411/- p.m.17. To impugn the decision, dated September 30, 1964, of the Revisional Court, the parties preferred six Special Civil Applications under Articles 226/227 of the Constitution to the High Court. By a common order, a learned single Judge of the High Court dismissed these applications except that he corrected some arithmetical errors and, in consequence, fixed the standard rent of properties 983/1 to 983/12 at Rs. 841.07 and that of premises 984/ 54 at Rs. 462/11 p.m.18. It is against this decision dated 12/13th October, 1971 of the High Court that these appeals have been filed by special leave.

Court's reasoning:
29. True, that unlike the English Rent Control Act of 1920 or the later English Acts, the (Bombay) Act does not expressly speak of apportionment. But the language of its relevant provisions construed consistently with the scheme and inbuilt policy of the Act, is elastic enough to permit the fixation of standard rent on apportionment basis. As noticed already, Section 11(1) gives a discretion to the Court to fix such amount as standard rent as it "deems just". However, in exercising this discretion the Court has to pay due regard to (i) the provisions of the Act and (ii) the circumstances of the case.30. Apportionment - or equal distribution of the burden of rent on every portion - is a rule of justice and good sense. If the standard rent of a whole was a specific amount, it stands to reason that the standard rent of a part or sub-division of that whole should not ordinarily exceed that amount. Therefore, if in the circumstances of a given case the Court feels that for securing the end of justice and giving effect to the provisions and policy of the Act, it is reasonably necessary and feasible to work out the standard rent by apportionment, it can legitimately do so. This principle, however, is applicable where on the basic date, that portion of which the standard rent is to be determined, had not been let separately as one unit, but the whole of which it is a part, had been let on that date. Apportionment postulates that on account of its having been let on the basic date, the whole had acquired a standard rent which has to be allocated to smaller units subsequently carved out of it.31. It is thus clear that the principle of apportionment is not alien to the spirit of the Act, and has indeed been often invoked by the courts in fixing standard rent under this Act.In Narayanlal Bansilals case (1965) 67 Bom LR 352 (supra), a Division Bench of the Bombay High Court determined standard rent of another part of this very estate of the Mills in accordance with that principle.We see force in the argument as also textual and pragmatic support. But these considerations do not preclude the Court from importing the flexible factors of fairness suggested by the circumstances of the case. Indeed Section 11, as explained earlier, obliges the Court to do it. Moreover, the interpretation of "premises" adopted by the learned Judge was a little too literal, narrow and divorced from the purpose and content of the provisions relating to fixation of standard rent. Nor was it in accord with the scheme and object of the 1918 Act. The Courts jurisdiction to consider, as a strong circumstances, proper apportionment of rent is not taken away, in our view., it is contended that the courts below have seriously erred in evaluating the land under the suit properties at Rs.30/- per sq. yd.on the basis of an instance (Ex. R. 6) of the year 1942, while they should have taken into account the value of the land as in the year 1948. It is added that some photostat copies of saledeeds pertaining to the relevant year were produced by Mr. Deweja, architect examinsional Court wrongly rejected them as unproved. It is maintained that in 1948, the market value of the site underneath the structures was Rs.120/- per sq. yd.In support of his contention that the value of the land at the date of the letting is the appropriate value to be taken into account.We are unable to accept this contention also. The courts below in capitalising the structures, 983/10 to 983/12 and 984/54, did take into account the value of the land married to those properties at the rate of Rs. 50/- per se. yd. which, according to their estimate, after adding Rs.30/- per sq. yd.for escalation, would be the market value of that land in the year 1948. Since the rent of the old unchanged properties 983/1 to 983/9 was fixed mainly on apportionment basis, the courts did not think it necessary to take the value of their sites separately into computation in fixing the standard rent. Moreover, there was no evidence on the record to show that the value of the land in question, in the year 1948 was Rs.120/- per sq. yd.We therefore, do not think it necessary to examine Cooverjis case, (1965) Bom LR 692 cited by the Counsel. We however, do not rule out the propriety of paying regard to escalations in land value as put forward by Mr. Cooper, but do hold that this Court will be loath to re-investigate factul conclusions not shown to be perverse or manifestly unjust. Such is not the case here.If on the basic date, the suit premises were not let out separately but were a part of theof a larger demiseas in the instant casedifficulty arises in giving effect to the statute. Clause (c) of Section 11(1) then comes into operation. To resolve the difficulty this clause and the related provisions are not to be construed in a narrow technical sense, which would stultify or defeat their object. It is to be interpreted liberally in a manner which would advance the remedy, suppress the mischief and foil subtle inventions and evasions of the Act. Construed in accordance with this socially relevant rule in Heydens case, the meaning of the premises having been let at one time as a whole, spoken of in this clause, can legitimately be deemed to cover the larger premises which, on the basic date, had been let as a whole and of which the suit premises was a part let out subsequently. In any event, the amplitude of the phrase " or any other reasons" in the latter part of the clause, is wide enough to embrace cases of this kind and confers a plenary curative power on the Court.However, while conceding that apportionment is not foreign to the scheme purpose and policy of the Act, we will like to emphasis the need for caution and circumspection in invoking it. It is not to be rigidly and indiscriminately applied as arule of law regardless of time and circumstances or the equities of the case. A doctrinnaire approach, not consistent with a just and fair determination, stultifies the whole salutary purpose of justice to both the landlord and the tenant. If necessary, it can be adjusted, adapted and attuned in the light of the particular circumstances of the case, to satisfy the statutory requirement of fixing the standard rent at a "just" amount. Thus, if after the material date, the landlord has made investments and improvements in the premises, it will be just and reasonable to take that factor also into account and to give him a fair return on such investments. Further, in apportioning the rent, the Court must consider other relevant circumstances, such as "size, accessibility, aspect and other physical advantages" enjoyed by the tenant of the premises of which the standard rent is in question, as compared with those of the rest of the property in which it is comprised (seeBainbridge v. Congdon (1925) 2 KB261). Where after the basic date, the premises completely change their identity, apportionment as a method of determining just standard rent, loses its efficacy and may be abandoned altogether. We have only illustrated, not exhaustively enumerated the relevant circumstances and their implications.We reject the narrow interpretation of the relevant provisions of Sections 2 and 11, canvassed for by the appellants, for two reasons : Firstly, it will leave the door wide open for evasion of this statute by – what Abbot C. J. in Foxv. Bishop of Chester, (1824) 2 B and C 635at p. 655called "shift or contrivance". All that a greedy landlord need do to squeeze out more rent would be to divide his premises into several parts and let them out separately on exorbitant rents. Such an evasion may amount to a fraud upon the statute. Secondly, such a construction, so manifestly subversive of one of the primary objects of the Act, would be wholly beyond the intendment of the Legislature.39. For reasons aforesaid we would negative the first contention of Mr. Cooper, as an inflexible proposition and answer the first part of the question posed in the affirmative to the extent indicated. Ittakes us tot he second part of that question, namely, whether the principle of apportionment was correctly applied to the facts of theThe first part of the contention based on the judgment of Samson J. is groundless. The judgment of the first trial court was set aside in toto by the Revisional Court, and further by the High Court and the case was remanded for de novo trial to the trial court which therefore, decided the case afresh after allowing the applicant to amend his R.A.Ns. It is too late in the day any way to argue on the assumption that the findings stillcourts below have found that excepting properties 983/10, 983/11, 983/12 and 984/54 which were admittedly new structures construed near about 1948, the rest of the properties, namley 983/1 to 983/9 had not lost their identity. The courts therefore, worked out the economic rent of these new structures by capitalisign their value and gave the landlord a fair return on his investments and fixed their standard rent mainly on that basis.It was with regard to the unchanged old properties 983/1 to 983/9 that the High Court and the Revisional Court mainly adopted the method of apportionment. Even so, it allowed the landlord fair return over Rs. 14,448/being the cost of flooring, ceiling and other fixtures fixed to property 983/6. Now it is disputed that on the basic date (September 1, 1940), these properties in question were parts of a larger entity comprised in a single lease or tenancy in favour of Sound Studios at a monthly rent of Rs.The courts below have therefore taken into account this basic circumstance along with the other relevant facts of the case. We do not find anything so wrong or unfair or untenable in the method adopted by them which would warrant an interference by this Court in exercise of its special jurisdiction under Art. 136 of the Constitution. Not that apportionment must be applied in all cases as a rule of law but that, if applied along with other consideration dictated by a sense of justice and fairplay cannot be condemned by this court as illegal. We therefore, overrule this contention, also.e are unable to accept this contention also. The courts below in capitalising the structures, 983/10 to 983/12 and 984/54, did take into account the value of the land married to those properties at the rate of Rs. 50/per se. yd. which, according to their estimate, after adding Rs.per sq. yd.for escalation, would be the market value of that land in the year 1948. Since the rent of the old unchanged properties 983/1 to 983/9 was fixed mainly on apportionment basis, the courts did not think it necessary to take the value of their sites separately into computation in fixing the standard rent. Moreover, there was no evidence on the record to show that the value of the land in question, in the year 1948 was Rs.per sq. yd.We therefore, do not think it necessary to examine Cooverjis case, (1965) Bom LR 692 cited by the Counsel. We however, do not rule out the propriety of paying regard to escalations in land value as put forward by Mr. Cooper, but do hold that this Court will be loath tofactul conclusions not shown to be perverse or manifestly unjust. Such is not the case here.