M/S. Kamakshi Silk House vs Prakash P.Mehta

The landlord of the properties involved in the present Civil Revision Petitions is one and the evidence is also similar, but premises are different and tenants are different. The issues involved in both the original rent control cases are also similar. Hence, all the Civil Revision Petitions are taken up for disposal by way of this common order. For the sake of convenience, the parties hereinafter are referred to as landlord and tenants.

C.R.P.Nos.4444 & 5909 of 2010 and 5435 of 2011 are relating to R.C.No.536 of 2006 and R.A.No.64 of 2009. C.R.P.Nos.4443 & 5929 of 2010 and 5436 of 2011 are relating to R.C.No.537 of 2006 and R.A.No.63 of 2009.

The landlord filed R.C.No.536 of 2006 on the file of the II Additional Rent Controller, Hyderabad (hereinafter referred to as ‘trial Court’), for fixation of fair rent of Rs.10,000/- in respect of Flat Nos.16 and 17, admeasuring 780 sq.ft., first floor, bearing municipal No.4-1-938, Krishna Apartments, New Marketing Complex, situated at Tilak Road, Abids, Hyderabad, (hereinafter referred to as ‘petition schedule-I property’). The said application was partly allowed fixing fair rent of Rs.6,500/- per month. Aggrieved by the same, the tenant therein preferred R.A.No.64 of 2009 on the file of the Chief Judge, City Small Causes Court, Hyderabad (hereinafter referred to as ‘lower appellate Court’) and the landlord also filed cross-objections in the said appeal seeking further enhancement of rent. The lower appellate Court dismissed both the appeal as well as cross-objections. Aggrieved by the said dismissal, the landlord preferred C.R.P.No.4444 of 2010 and the tenant therein preferred C.R.P.No.5909 of 2010 before this Court. The tenant therein also filed C.R.P.No.5435 of 2011 aggrieved by dismissal of I.A.No.428 of 2009 in R.A.No.64 of 2009, which was filed under Order XLI Rule 27 of C.P.C read with Section 151 of C.P.C., seeking leave for introducing additional evidence.

The landlord also filed R.C.No.537 of 2006 on the file trial Court, for fixation of fair rent of Rs.11,300/- in respect of Flat Nos.14 and 15, admeasuring 884 sq.ft., first floor, bearing common municipal No.4-1-938, Krishna Apartments, New Marketing Complex situated at Tilak Road, Abids, Hyderabad, (hereinafter referred to as ‘petition schedule-II property’). The said application was partly allowed fixing fair rent of Rs.7,000/- per month. Aggrieved by the same, the tenant therein preferred R.A.No.63 of 2009 on the file of lower appellate Court and the landlord also filed his cross-objections in the said appeal seeking further enhancement of rent. The lower appellate Court dismissed both the appeal as well as cross-objections. Aggrieved by the said dismissal, the landlord preferred C.R.P.No.4443 of 2010 and the tenant therein preferred C.R.P.No.5929 of 2010 before this Court. The tenant therein also filed C.R.P.No.5436 of 2011 aggrieved by dismissal of I.A.No.427 of 2009 in R.A.No.63 of 2009, which was filed under Order XLI Rule 27 of C.P.C read with Section 151 of C.P.C., seeking leave for introducing additional evidence.

The tenants of petition schedule-I and II properties are father and son. The landlord of both petition schedule properties is one and the same.

The case of the landlord is that he purchased the petition schedule properties in a Court auction and he was granted certificate of sale on 13.03.1990. Prior to such purchase, the tenants were in occupation of the petition schedule properties on the basis of lease from previous owner. Subsequent to said purchase, the relationship of landlord and tenants continued between the present parties. The monthly rent payable was only Rs.600/- for each of the petition schedule properties. Both the properties are located in the first floor of Krishna Apartments, New Marketing Complex, situated at Tilak Road, Abids, Hyderabad.

The ground floor of the said apartment is used for commercial purpose and by efflux of time some of the residential premises in the said apartment were let out for commercial purposes. The petition scheduled properties consist of drawing/dining room, bed room with attached toilet, kitchen and common balcony. Though, the petition schedule properties were located in heart of Hyderabad City, which is a prime location in twin cities, the rents paid by tenants were very low. The prevailing rental value in the said area was not less than Rs.15/- per sq. ft.

Further, there is tremendous increase in the cost of the land/construction and the rents in the surrounding area near the petition schedule properties. There are many business establishments such as jewellery shops, general stores, super markets, cloth shops, hotels, cinema halls and other business establishments in the surrounding area. The total market value of each petition schedule property is more than Rs.45,00,000/-. In the said circumstances, the landlord sought for fixation of fair rent.

The tenants filed their counters and admitted their relationship with landlord. They admitted the rent being paid to the landlord, but denied the prevailing rental value of Rs.15/- per sq.ft. It is contended that the petition schedule properties were 30 years old and there were damages of walls, floors, bathrooms and leakages. The electrical fittings were also age old and require repairs. Further, the grills, doors and windows were also damaged. The landlord did not undertake any repairs and the tenants only conducted repairs and white washing. The petition schedule properties are not in habitable condition and there is serious risk for living in the said premises, but the landlord has not taken any care. Hence, prayed to dismiss the petitions.

The landlord got examined P.Ws.1 to 3 in both the rent control cases before the trial Court and got marked Exs.P-1 to P-9 in R.C.No.536 of 2006 and got marked Exs.P-1 to P-10 in R.C.No.537 of 2006. The tenants got examined R.W.1 i.e., the tenant in R.C.No.537 of 2006 and son of tenant in R.C.No.536 of 2006. On behalf of the tenants, Exs.R-1 to R-15 were got marked in R.C.No.536 of 2006 and Exs.R-1 to R-10 were marked in R.C.No.537 of 2006.

The trial Court considering the evidence on record found that the landlord is entitled for fixation of fair rent of Rs.6,500/- and Rs.7,000/- in respect of petition schedule-I & II properties respectively. Aggrieved by the said order, the tenants and landlord filed appeals and cross-objections before the lower appellate Court respectively and the same were dismissed confirming the order of trial Court. Hence, the present revision petitions.

Heard both sides.

On the basis of above, the following points for consideration are framed:

“1. Whether fixation of fair rent by the Courts below suffers from any perversity?

Whether the landlord is entitled for fixation of periodical enhancement of rent in the absence of any claim in this regard?”

Point Nos.1 and 2:-

The landlord has examined himself as P.W.1. He also examined P.W.2, who is tenant of commercial space in the opposite building. According to P.W.2, he is tenant of the premises admeasuring 2500 sq.ft. and he has been paying Rs.28,620/- per month towards rent. His evidence also shows that the commercial space to which he is tenant was also constructed in the year 1976 similar to that of petition schedule properties. He also produced his bank statement pertaining to the year 2008 to show that he was paying monthly rent of Rs.28,620/-. He admitted in his cross-examination that he was tenant for the said premises from last three years i.e., from the year 2006. He did not produced bank statement pertaining to the years 2006 and 2007 showing payment of rent to his landlord. The landlord also got examined property valuer as P.W.3. He deposed that he visited the petition schedule properties and assessed the value and opined that the prevailing market value is not less than Rs.17/- per sq.ft.

The tenants got examined R.W.1 in both the cases. The tenant in R.C.No.537 of 2006 is son of tenant in R.C.No.536 of 2006. The tenant in R.C.No.536 of 2006, who is father, has not entered into witness box, however, his son, who is tenant in R.C.No.537 of 2006 was examined in both the rent control cases before the trial Court. The evidence of R.W.1 shows that the petition schedule properties were damaged and were unfit for occupation. He also claimed that there is no parking place and there is no fresh development in the locality, even though initially it was commercial area. He further claimed that there is no proper water facility and water is being purchased through water tanks. There is no commercial activity in other floors of the apartment except in ground floor. In his cross-examination, R.W.1 admitted that in the deposition of previous case i.e., R.C.No.498 of 1997 he admitted that there was conversion of usage of few flats in the apartment from residential to commercial activity.

The contention of the learned counsel for the tenants is that both the Court below have not properly appreciated the evidence on record and also the factors relevant for fixing of fair rent. The fair rent was fixed without any evidence. Therefore, such a fixation requires interference by this Court.

On the contrary, learned counsel for landlord has contended that the fair rent fixed by both the Courts below were meagre and in fact, the revisions of tenants are not maintainable since there are concurrent findings of fact with regard to fixation of fair rent. The interference of this Court is only required when the fair rent fixed by both the Courts below suffers from perversity.

The evidence on record clearly demonstrates that the petition schedule properties are located on the road leading from Abids to Bogulakunta. It is fully commercial area. The apartment is of seven floors and ground floor consists of entire commercial area. It is not seriously disputed that both the petition schedule properties are located in first floor. There is admitted evidence from the tenant/R.W.1 in the previous proceedings that some of the premises in the third and other floors were being converted from residential to commercial purpose. Then, a suggestion was made to him that similar flats in the apartment were let out for commercial activities and Rs.13,000/- was paid by those tenants towards rent. The said suggestion was denied, however the tenant claimed that he was not aware.

The tenants claimed that petition schedule properties were in dilapidated condition and there are cracks and leakages in walls. The landlord did not even got the walls painted. He also claimed that one side of wall fell down and he got it repaired. However, there is no evidence to show that repairs were performed by the tenants. Further, no application was filed by the tenants under Section 19 of the Buildings (Lease, Rent and Eviction) Control Act, 1960, seeking permission to conduct repairs and no notice was given to the landlord seeking to perform repairs to the wall that fell down. In fact, R.W.1 admitted that a letter was sent along with cheques, but no claim was made for repairs. This evidence clearly shows that the claim set up by the tenants that the premises was not fit to habitat is only an afterthought and the same was rightly rejected by both the Courts below.

The evidence of P.W.2 clearly demonstrate that commercial premises situated in the building opposite to the petition schedule properties was let out for monthly rent at Rs.11.45/- per sq.ft. P.W.3 is valuer and he has claimed that the prevailing rate of rent is Rs.17/-per sq.ft and his assumption was based on enquiry. It is not known with whom enquiry was made and how he had come to conclusion of rate of rent at Rs.17/- per sq.ft. This evidence was rightly rejected by the Courts below. The valuer is expert in valuing the property and he cannot value the rent, as rental value assessed by P.W.3 is based on assumption and not on his expertise.

The evidence of P.W.2 cannot be completely ignored, when the tenants are not disputing that there is M/s. Silicon Business Solutions Pvt. Ltd. P.W.2 claims to be Managing Director of said company. The prevailing rent for commercial premises in a building, which is constructed in the same year as the building of petition schedule properties was Rs.11.45/- per sq.ft. The evidence also clearly demonstrates that the premises were fit for conversion. Few other flats were already converted from residential to commercial. This means, the petition schedule properties had potential to get converted, so that the landlord can get higher rent. This cannot be brushed aside.

The landlord has claimed that in the same premises, similar dispute arose with regard to fixation of fair rent in the year 2009. The said matter went upto the Hon’ble Supreme Court. It was decided that the rent would be Rs.60 /- per sq.ft. If such, is the value of the fair rent in respect of commercial area in same premises, definitely the rent fixed by the rent controller as well as lower appellate Court is on meagre side. No doubt, the Apex Court confirmed the fixation of fair rent of Rs.60/- per sq.ft. in respect of commercial premises on the ground floor of the same complex and such a dispute arose in the year 2009. The present petition is filed in the year 2006 and the petition schedule properties were let out for residential purpose. Though, the rent payable to the commercial premises cannot be criteria for fixing the rent for residential premises, this Court cannot ignore such evidence which has some bearing, for the reason that the premises was available for conversion from residential purpose to commercial purpose. In fact, some of the flats in the apartment were already converted from residential to commercial and the landlords therein are enjoying more rent.

The other factors which are made out from the evidence are that the petition schedule properties are in commercial area and the building has a lift, stair case and there is also overhead water tank. The building must be having a municipal water connection, but such a water supply might not be sufficient to meet the requirements of residents in certain seasons. Shortage of water is prevalent in majority of the apartments in twin cities and this cannot be termed as disadvantage, so as to justify the contention of low rent.

The tenants claimed that the premises is unfit for habitat and in fact there were cracks and one of the side wall fell down, which he got repaired. Admittedly, there is no evidence except self claim of tenants and no notices of any kind were issued prior to present application to meet the requirement as contemplated under Section 19 of the Buildings (Lease, Rent and Eviction) Control Act, 1960. Such a resort was not invoked until the present applications for fixing the rents were filed. It is subsequent to the present application, the tenants have filed R.C.Nos.476 and 477 of 2009 before the rent controller for repairs. The order in the said rent control cases were produced and the claim of the tenants for repairs basing on the valuer report was held to be not correct, for the reason that he has claimed that he has visited the premises on 05.10.2009. Whereas, the photographs filed therein show that they were taken on 26.09.2009. This means, he has not visited premises as claimed by him. In the light of the said findings, the applications to receive additional documents for same report have no merit. Therefore, the C.R.Ps. preferred against dismissal of application filed for receiving additional documents pertaining to valuer requires to be dismissed.

This Court having considered the location of the petition schedule properties, potential to get converted for commercial activity as some other flats were already converted from residential to commercial, prevailing rental value for commercial premises and age of property feels that the fair rent fixed by both the Courts below requires no interference by this Court. This Court also finds that no evidence is produced to enhance the rent in light of the landlord’s own evidence, which demonstrates that the prevailing rate of rent for commercial premises is also only at Rs.11.45/- per sq.ft. Therefore, in this regard, both the claims are required to be rejected.

The contention of the learned counsel for landlord is that though no periodical enhancement is sought, however, considering hardship on account of prohibition under the Buildings (Lease, Rent and Eviction) Control Act, 1960, the appropriate enhancement on fair rent can be granted for every three years in terms of principles laid down by the Apex Court and also by this Court.

The learned counsel for the tenants has opposed the said contention stating that it is contrary to law and no periodical enhancement can be granted without pleadings/prayer.

This Court while considering similar contention in C.R.P.No.5014 of 2015 held that in the absence of such a specific prayer, the Court in order to do justice and prevent injustice by reliving hardship under the Buildings (Lease, Rent and Eviction) Control Act, 1960, can grant 10 % enhancement for every three years by adopting principles laid down by the Apex Court in the case of Mohammed Ahmad Vs. Atma Ram Chauhan MANU/SC/0614/2011.

Accordingly, it is held that the landlord is entitled for periodical enhancement of 10% for every three years on the fair rent fixed by the trial Court.

In the result, the Civil Revision Petition Nos.5909 & 5929 of 2010 and 5435 & 5436 of 2011 filed by the tenants are dismissed and the Civil Revision Petition Nos.4443 and 4444 of 2010 filed by the landlord are partly dismissed confirming the fair rent granted by both the Courts below and partly allowed by granting periodical enhancement of 10% of fair rent for every three years. The arrears of rent shall be paid within two months from the date of receipt of copy of this order. There shall be no order as to costs. Miscellaneous applications, if any, pending, shall stand closed.