IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.710 OF 2020
(arising out of SLP (C) No. 28951 of 2019)
N. MOTILAL & ORS.
FAISAL BIN ALI & ANR.
J U D G M E N T
This appeal has been filed by the appellants, who are tenants of a
Brief facts of the case necessary to be noted for deciding the appeal are:
The appellants are tenants of a Shop
rent at the rate of Rs.60/- per sq. ft i.e.
3.Shri Yelamanchili Shiva Santosh Kumar, learned
counsel for the appellants submits that the contract of tenancy between the appellants and the landlord entered into on 27.08.1990 was to subsist till 31.07.2010, hence, the
4.Learned counsel for appellants has placed strong
reliance on minority judgment of this Court delivered by Bhagwati, J. in M/s. Raval and Co. vs. K.G.
Ramachandran, 1974(1) SCC 424. Reliance has been placed on paragraphs 25 to 30 of the minority judgment which had taken the view that it is only when the contract of tenancy is lawfully determined that the landlord becomes entitled to apply for fixation of fair rent and during subsistence of contractual tenancy landlord is precluded from making an application for fixation of fair rent. Learned counsel further submits that the respondents have purchased the property for a meagre amount of Rs.5,24,500/- in the year 2008 and looking to the fair rent fixed by the Rent Controller 20 months of rent covers the sale price of the property.
5.Learned counsel for the appellants has further submitted that Model Rent Control Legislation has
been circulated by the Central Government to all States to uniformly amend the State Legislation where it is now provided that during subsistence of contract landlord is precluded from making any application for fair rent.
6.Smt. Kiran Suri, learned senior counsel appearing
for the respondents refuting the submission of the
counsel for the appellants contends that the reliance of appellants on a minority judgment of this Court in M/s. Raval and Co. is misplaced. The majority judgment delivered by Alagiriswami, J. has categorically laid down that in Section 4 of the Tamil Nadu (Lease, Rent and Eviction) Control Act, 1960(Tamil Nadu Act 18 of 1960) which is pari materia of Section 4 of Telangana Buildings (Lease, Rent and Eviction) Control Act, 1960 permits filing of application for fixing of fair rent by the landlord during subsistence of contractual tenancy. She further submits that the judgment of this Court in M/s. Raval & Co. has been further approved by seven-
Judge judgment in V. Dhanapal Chettiar vs. Yesodal
Ammal, 1979(4) SCC 214. It is further submitted that the appellants cannot be allowed to make submission in regard to sale consideration of the property, sale between the relatives, consideration was fixed accordingly.
7.We have considered the submissions of learned
counsel of the parties and perused the records.
8.The moot question to be answered in this appeal
is as to whether during currency of contractual tenancy i.e. during the currency of agreed rent between the landlord and the tenant whether landlord is precluded from making an application for determination of fair rent. Section 4 of the Telangana Act, 1960 provides for determination of fair rent. Section 4(1) provides:
“Section 4(1) The Controller shall, on application by the tenant or landlord of a building fix the fair rent for such building after holding such inquiry as the Controller thinks fit.”
9.The above provision gives right to both the
tenant and the landlord of a building to make an application for fixing fair rent. The provision of Section 4(1) cannot be read in a manner that it is not applicable with regard to the contractual tenancy. The Rent Control Legislations are enacted to protect both tenant and the landlord. In the event the submission of the appellants is accepted that during the currency of the contract of tenancy, no one can file application for fixing of fair rent, the
said provision shall operate detrimental to both the tenant and the landlord. This can be explained by taking an illustration. A tenant, who is in urgent need of premises, entered into a contract with landlord where he had to agree to pay an unreasonable higher rent during the force of circumstances, if the tenant has no right to make an application for fixing of fair rent during the currency of tenancy, the said provision will harshly operate against the tenant. The concept of determination of fair rent is to operate equal for the tenant as well as the landlord. The object of the Act is that neither the landlord should charge more than the fair rent of the premises nor tenant should be forced to pay higher rent than the fair rent. The statutory scheme brought in the statute by way of Section 4 which is a beneficial both to the tenant as well as the landlord.
10. The Constitution Bench of this Court in M/s. Raval & Co. had occasion to consider Section 4 of the Tamil Nadu Act 18 of 1960. Section 4 of the said Act provides for application for fixation of the fair rent
for the tenant as well as the landlord. In the
majority judgment speaking through Alagiriswami, J. in
paragraphs 18 and 19 following has been laid down:
“18. The provisions of the Act under consideration show that they are to take effect notwithstanding any contract even during the Subsistence of the contract. We have already referred to the definition of the terms landlord and tenant which applies both to subsisting tenancies as well as tenancies which might have come to an end. We may also refer to the provision in Section 7(2) which lays down that where the fair rent of a building has not been fixed the landlord shall not claim anything in addition to the agreed rent, thus showing that the fair rent can be fixed even where there is an agreed rent. That is why we have earlier pointed out that the various English decisions which provide for fixation of rent only where the contractual tenancy has come to an end do not apply here. We may also refer to
19……………A close analysis of the Madras Act
shows that it has a scheme of its own and it is intended to provide a complete code in respect of both contractual tenancies as well as what are popularly called statutory
tenancies. As noticed earlier the definition of the term landlord as well as the term tenant shows that the Act applies to contractual tenancies as well as cases of "statutory tenants" and their landlords. On some supposed general principles governing all Rent Acts it cannot be argued that such fixation can only be for the benefit of the tenants when the Act clearly lays down that both landlords and tenants can apply for fixation of fair rent. A close reading of the Act shows that the fair rent is fixed for the building and it is payable by whoever is the tenant whether a contractual tenant or statutory tenant. What is fixed is not the fair rent payable by the tenant or to the landlord who applies for fixation of fair rent but fair rent for the building, something like an incident of the tenure regarding the building.”
11. Learned counsel for the appellants has placed
reliance on the minority judgment delivered by
Bhagwati, J. for himself and K.K. Mathew, J. although
the minority judgment has held that landlord can make
an application for determination of fair rent only
after the determination of tenancy and during
subsistence of contractual rent no application for
fair rent can be given. We are bound by the majority
opinion of the Constitution Bench in M/s. Raval & Co.
We further notice that both the learned counsel have
in V. Dhanapal Chettiar vs. Yesodal Ammal (supra).
Constitution Bench judgment in M/s. Raval & Co.
(supra) which was quoted with approval. Referring to
majority judgment in M/s. Raval & Co.’s case seven-
Judge Bench made following observation:
“15………Alagiriswami J. at page 635 after
having made that observation with reference to Bhaiya Panjalats case has
another town letting out his premises to a tenant financially strong and of strong, nerves at a rate comparatively much lower than the prevailing market rates. Later on, on the normalization of the situation as against the agreed rate of rent be approaches the Building Controller for fixing a fair rent in accordance with a particular State Rent Act. Why should she or he be debarred from doing so. The statute gives him the protection and enables the Controller to intervene to fix a fair rent as against the term of contract between the parties. In a large number of cases it is the tenant who gets this protection. But in some as in the case of Raval the landlord needs and gets the protection. But this is not a direct authority on the point of notice.”
12. The above observation clearly indicates that
majority view of the Constitution Bench expressed by
Alagiriswami, J. was quoted with approval and the
freedom of contract between the landlord and tenant
has been envisaged for protecting both the tenant and
landlord. The example as quoted in paragraph 15 as
extracted above clearly indicates that denial of
landlord in moving application for fixation of rent in
several cases may operate against the interest of the
13. The Constitution Bench judgment in M/s. Raval & Co.’s case as well as
14. The submission of the counsel for the appellants that the consideration on which property was purchased by the landlord in 2008 is equivalent to 20 months’ rent as enhanced by Rent Controller has no bearing on the issue which has been sought to be raised. The determination of the fair rent has to be made as per the provisions of the 1960 Act and the above submission in no manner advance the case of the appellant.
15.The last submission of the learned counsel for the appellants is that the Central Government,
Ministry of Housing and Urban Development has circulated a Model Rent Control Legislation to be
adopted by all the States which precludes the landlord for making application for fixation of fair rent during the currency of contractual tenancy (which circular has also not been brought on record), suffice it to say that as per submission of the counsel for the appellants himself that Model Legislations are only guidelines, which in no manner, can have any effect on the statutory provisions of 1960 Act which are still occupying the field. No other submission has been advanced by the counsel for the appellants.
16. We do not find any merit in this appeal. The appeal is dismissed.
( ASHOK BHUSHAN )
( M.R. SHAH )
January 30, 2020.