1 HIGH COURT OF MADHYA PRADESH : JABALPUR Second Appeal No.1037/2009 Santosh Kumar Vs. Purushottam Soni and another Present : Hon’ble Mr. Justice R.S. Jha. For the appellant : Shri Sankalp Kochar, advocate. For the respondents : Shri R.P. Agrawal Senior counsel with Shri Santosh Yadav, advocate.
JUDGMENT(26.02.2013) The appellant has filed this appeal being aggrieved by order dated 29.06.2009 passed by the 6th Additional District Judge, Sagar in M.A. No.01/2009 affirming and confirming the order dated 13.10.2008 passed by the Rent Controlling Authority in case No.1- A/90(1)2007-08 rejecting the application filed by the appellant for increasing the rent.
2. Undisputedly, the respondents are the tenants of the appellant and are in occupation of a shop situated at Gandhi Chowk Ward, Bada Bazar, opposite Paras Talkies, Main Road, Sagar, having been inducted as 2 such by the appellant in the year 1960. It is also undisputed that the rent of the accommodation was initially fixed at the rate of Rs.40/- by the Rent Controlling Authority by order dated 10.07.1975, being aggrieved by which the appellant had taken up proceedings which were ultimately decided by this court in S.A. No.51/1976 on 12.03.1982 in which the standard rent of the accommodation was fixed @ Rs.60/- per month and therefore, since the very beginning the respondents have been paying rent of the accommodation @ Rs.60/- per month. It is also undisputed that the appellant, after orally requesting the respondents to increase the rent, issued a notice to the respondents dated 02.07.2007 asking them to increase the rent of the accommodation to Rs.5000/- per month, reply to which was filed by the respondents on 19.07.2007 refusing to do so on the ground that the appellant was only entitled to recover the standard rent and therefore, the appellant filed an application on 25.08.2007 before the Rent Controlling Authority for increase of rent. The application was supported by an affidavit in which it was stated that as the appellant was paying property tax, water tax, sanitary cess etc. 3 and as the rate notified by the Municipal Corporation for determining and calculating the property tax was Rs.80/- per sq.ft. in the area in question, therefore, the rent be increased to Rs.5000/- per month. The application filed by the appellant before the Rent Controlling Authority was opposed by the respondents, consequently the application for increase of the rent was dismissed by the Rent Controlling Authority on 13.10.2008, being aggrieved by which the appellant filed an appeal before the District Judge, Sagar which has also been dismissed vide impugned order dated 29.06.2009. The court below as well as the Rent Controlling Authority have held that the increase as provided and required under the provisions of M.P. Accommodation Control Act, 1961 (hereinafter referred to as 'the Act') specifically sections 8, 9 and 10 of the Act, entitle the appellant to claim an increase of only 10% of the rent and not more. The court below in the impugned order has also held that once the standard rent has been fixed under the provisions of the Act, and it has been affirmed by this court, the general principle of res- judicata would apply and therefore, the appellant could not claim increase of the rent beyond Rs.60/- per 4 month. The court below has further held that in view of the express provisions contained in chapter II of the Act, the appellant/landlord is not authorized to increase the rent beyond the limit of 10% as contained in section 8 (1) of the Act, that too, only when the conditions mentioned in section 8 (1) of the Act, are fulfilled. The court below on recording the aforesaid conclusion has dismissed the application filed by the appellant, hence this appeal.
3. It is submitted by the learned counsel for the appellant that the accommodation in question was let out to the respondents in the year 1960 and the rent was fixed @ Rs.60/- per month. It is submitted that since 1960 the respondents are continuing to pay rent @ Rs.60/- per month and inspite of lapse of more than 50 years they continued to do so though the rent in the area in question has increased several folds and in such circumstances, the application for increase of rent could not have been dismissed by the court below and the authority concerned.
4. It is further submitted that the provisions of the Act permit the appellant to file an application seeking increase of rent which has to be considered in 5 accordance with the provisions of section 10 of the Act and cannot be dismissed only on the ground that the standard rent has already been fixed at the initial stage. The learned counsel for the appellant further submits that the increase in rent cannot be limited to 10% as mentioned in section 8(1) of the Act, moreso, as section 8(1) of the Act, applies only to limited instances where the landlord/tenant has incurred expenditure for improvement, addition or structural alteration of the accommodation and wishes to recover cost of the same. It is submitted that the courts below have not considered the other parts of Section 8 of the Act.
5. The learned counsel for the appellant, relying upon the decision of the Supreme Court rendered in the case of Mohammad Ahmad and another Vs. Atma Ram Chauhan and others (2011) 7 SCC 755.has asserted that the guidelines and norms laid down by the Supreme Court in the aforesaid judgment have the force of law and are binding on all concerned and as the aforesaid guidelines and norms provide and prescribe increase in rent after every three years, therefore, the impugned order be set aside and the Rent Controlling Authority be directed to decide the 6 application filed by the appellant for increase of rent in accordance with the guidelines and norms issued by the Supreme Court.
6. The learned Senior Counsel appearing for the respondents, per contra, submits that in view of sections 2(c)(h), 5, 7, 8, 10 and 43 of the Act, the landlord in question can only recover the standard rent fixed by the authority concerned under the provisions of the Act and in case he recovers anything more than the standard rent, he is liable to penalty as prescribed under section 43 of the Act.
7. The learned Senior Counsel for the respondents further submits that a conjoint reading of the aforesaid provisions makes it abundantly clear that once the standard rent of an accommodation is fixed, it cannot be increased for the entire life of the tenancy and in view of the statutory prohibition for increasing the rent once fixed, under the provisions of the Act, the application filed by the appellant has rightly been dismissed. It is further submitted that the application for increase of standard rent was neither tenable not maintainable under the provisions of the Act and has, therefore, been rightly rejected as such. The learned 7 Senior Counsel has also placed reliance on the Division Bench decision of this court rendered in the case of Mukundlal Agrawal Vs. Shankerlal Vishwanath Prasad AIR 196.MP 18.to assert that the aforesaid interpretation of sections 7 and 10 of the Act, has been made in so many words by a Division Bench of this Court and in such circumstances, the law in this regard is settled against the appellant and therefore, no question arises for adjudication of this appeal which deserves to be dismissed.
8. I have heard the learned counsel for the parties at length.
9. To properly appreciate the contentions of the parties, it is necessary to take into consideration the provisions of the Act. While, section 2 (h) of the Act, which is the definition clause, provides that the “standard rent”. in relation to any accommodation means standard rent referred to in section 7 or where the standard rent has been increased under section 8, such increased rent. Section 2(c) defines the words “lawful increase”. to mean an increase in rent permitted under the provisions of the Act. Section 5 provides that a tenant is not required to pay any 8 amount in excess of the rent of the accommodation fixed under the Act and any agreement to the contrary would be construed to mean that the parties have agreed to pay the standard rent only.
10. Section 7 elaborates the meaning of standard rent in the following terms:-
“7. Standard Rent- “Standard rent”. in relation to any accommodation means- (1) Where reasonable annual rent or fair rent has been fixed by a competent authority under the repealed Act or prior to the commencement of the repealed Act, as the case may be, by a competent authority under the enactment for the time being in force, such reasonable annual rent or fair rent; (2) (i) where the accommodation was let out on or before the 1st Day of January, 1948, and the reasonable annual rent or fair rent has not been so fixed, the rent of that accommodation as shown in the Municipal Assessment Register or as was realized on the 1st day of January, 1948, whichever is less; or (ii) where the accommodation was not let out on or before the 1st day of January, 1948, the rent of that accommodation as shown in the Municipal Assessment Register or as could be realized on the 1st day of January, 1948 whichever is less; 9 increased- (a) in the case of a residential accommodation and accommodation used for education purposes, by thirty-five per cent of such rent; (b) in the case of other accommodation, by seventy per cent of such rent; and (c) in case the tenant is not liable to pay the municipal tax and there has been any increase in municipal tax subsequent to 1st day of January, 1948 [by an amount equal to such increase].; Provided that the increase specified in paragraphs (a) and (b) shall be permissible only if the accommodation has been kept in good and tenantable repairs; (3) in case of accommodation not falling under clause (1) and (2) above,- (a) if the accommodation is separately assessed to municipal assessment, the annual rent according to such assessment plus fifteen per cent thereon; (b) if only a part of the accommodation is so assessed, the proportionate amount of the annual rent for the whole accommodation according to such assessment plus fifteen per cent thereon; (c) if the accommodation is not so assessed,- 10 (i) the annual rent calculated with reference to the rent agreed upon between the landlord and the tenant when such accommodation is first let out, and if it has not been so let out, to such amount for which it could be let out immediately after its construction was completed; or (ii) the annual rent calculated on the basis of annual payment of an amount equal to 6-3/4 per cent per annum of the aggregate amount of the actual cost of construction and the market price of the land comprised in the accommodation on the date of the commencement of the construction; whichever is less.”
11. Section 8 of the Act, provides for lawful increase of standard rent in certain cases and states that:-
“8. Lawful increase of standard rent in certain cases and recovery of other charges-(1) where a landlord has, at any time, before the commencement of this Act with or without the approval of the tenant or after the commencement of this Act with the written approval of the tenant or of the Rent Controlling Authority, incurred expenditure for any improvement, addition or structural alteration in the accommodation not being expenditure on decoration or tenantable 11 repairs necessary or usual for such accommodation, and the cost of that improvement, addition or alteration has not been taken into account, in determining the rent of the accommodation, the landlord may lawfully increase the standard rent per year by an amount not exceeding ten per cent of the rent payable, for the time being. (2) Where a landlord pays in respect of the accommodation any charge for electricity or water consumed in the accommodation or any other charge levied by a local authority having jurisdiction in the area which is ordinarily payable by the tenant, he may recover from the tenant the amount so paid by him, but the landlord shall not save as provided in section 7, recover from the tenant whether by means of an increase in rent or otherwise, the amount of any tax on building or land imposed in respect of the accommodation occupied by the tenant. Provided that nothing in this sub-section shall affect the liability of any tenant under an agreement, whether express or implied, to pay from time to time the amount of any such tax as aforesaid.”
12. Section 9 of the Act, lays down that a landlord is require to give a notice where he wishes to increase the rent of an accommodation and provides that:- 12
“9. Notice of increase of rent- (1) Where a landlord wishes to increase the rent of any accommodation, he shall give the tenant notice of his intention to make the increase and in so far as such increase is lawful under this Act, it shall be due and recoverable only in respect of the period of the tenancy after the expiry of thirty days from the date on which the notice is given. (2) Every notice under sub-section (1) must be in writing signed by or on behalf of the landlord and either be sent by registered post acknowledgment due to the tenant or be tendered or delivered personally to him, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the accommodation.”
13. Section 10 of the Act gives powers and guidelines to the Rent Controlling Authority to fix the standard rent in the following terms:-
“10. Rent Controlling Authority to fix standard rent, etc. -(1) The Rent Controlling Authority shall, on an application made to it in this behalf, either by the landlord or by the tenant, in the prescribed manner, fix in respect of any accommodation- (i) the standard rent in accordance with the provisions of section 7; or 13 (ii) the increase, if any, referred to in section 8. (2) In fixing the standard rent of any accommodation or the lawful increase thereof, the Rent Controlling Authority shall fix an amount which appears to it to be reasonable having regard to the provisions of section 7 or section 8 and the circumstances of the case. (3) In fixing the standard rent of any accommodation part of which has been lawfully sub-let, the Rent Controlling Authority may also fix the standard rent of the part sub- let. (4) Where for any reason it is not possible to determine the standard rent of any accommodation on the principles set forth under section 7, the Rent Controlling Authority may fix such rent as would be reasonable having regard to the situation, locality and condition of the accommodation and the amenities provided therein and where there are similar or nearly similar accommodations in the locality, having regard also to the standard rent payable in respect of such accommodations. (5) The standard rent shall be fixed for a tenancy of twelve moths: Provided that where the tenancy is from month to month or for any period less than a month, the standard rent for such tenancy 14 shall bear the same proportion to the annual standard rent as the period of tenancy bears to twelve months. (6) In fixing the standard rent of any accommodation under this section, the Rent Controlling Authority shall fix the standard rent thereof in an unfurnished state and may also determine an additional charge to be payable on account of any furniture supplied by the landlord and it shall be lawful for the landlord to recover such additional charge from the tenant. (7) In fixing the standard rent of any accommodation under this section, the Rent Controlling Authority shall specify a date from which the standard rent so fixed shall be deemed to have effect. Provided that in no case the date so specified shall be earlier than thirty days prior to the date of the filing of the application for the fixation of the standard rent.”
14. A bare reading of the aforesaid sections make it clear that while section 7 of the Act, elaborates the meaning of the term “standard rent”. and section 8 of the Act, provides general parameters for lawful increase in rent, the actual power to fix and assess the rent of an accommodation is conferred on the Rent Controlling Authority under section 10 of the Act. To 15 put it differently, Section 7 of the Act does not fix or determine the standard rent as contended by the learned Senior Counsel for the respondents but only elaborates the meaning of term “standard rent”. while the actual determination of standard rent has to be made by the Rent Controlling Authority under section 10 of the Act in accordance with the terms laid down therein.
15. Before I proceed to analyze the provisions of the Act, which are relevant for determining the issue raised by the respondents in the present case, it is necessary to clarify the fact that as the accommodation in question in the present appeal was let out to the respondents in the year 1961, therefore, the provisions of sub sections (1) and (2) of section 7 of the Act have no applicability not are they relevant for determining the dispute involved in the present appeal.
16. A bare perusal of the provisions of section 7 (3) of the Act, which is relevant for the purposes of the present case, makes it clear that the term “standard rent”. in respect of an accommodation which is separately assessed to municipal assessment would 16 mean the annual rent in accordance with such municipal assessment plus 15% thereof and therefore, it is apparent and clear that the meaning of the term 'standard rent' in respect of an accommodation falling under section 3 (a) of the Act, would depend upon the annual rent of the accommodation which, in turn, is determined under the municipal assessment which is not static or stagnant and is subject to periodical re- assessment and enhancement under the provisions of M.P. Municipalities Act, 1961 or the M.P. Municipal Corporation Act, 1956, as the case may be.
17. A perusal of section 8 of the Act, makes it abundantly clear that the landlord is permitted to lawfully increase the standard rent and recover other charges from the tenant. While sub section (1) of section 8 of the Act, permits the landlord to lawfully increase the rent by 10% every year in case he has incurred expenditure on decoration, improvement, addition, alteration or repairs of the accommodation. Sub Section (2) of section 8 of the Act, permits the landlord to recover from the tenant any charges towards electricity or water consumed in the accommodation or any charge levied by a local authority having jurisdiction in the area which is 17 ordinarily payable by a tenant. It is further clear by reading the second part of section 8 (2) of the Act, that the landlord cannot directly recover any amount of tax on building or land imposed in respect of the accommodation occupied by the tenant but he may do so in terms of the provisions of section 7 of the Act which provides for taking into consideration the municipal assessment for the purpose of arriving at the meaning of words 'standard rent' by incorporating such terms in the agreement.
18. The provisions of section 9 of the Act, provide that the landlord is required to give a notice to the tenant of his intention to increase the rent of an accommodation in case he wishes to do so.
19. The relevant section for determining the controversy raised in the present appeal i.e. whether the act provides for increasing the standard rent once fixed is section 10 of the Act as it empowers the Rent Controlling Authority to fix the standard rent.
20. From a bare perusal of the provisions of section 10 of the Act itself, it is clear that section 10 (1) (ii) of the Act itself empowers the Rent Controlling Authority to increase the rent already fixed, on an application 18 being made in this behalf by the landlord or tenant, as referred to in section 8 of the Act. Section 10(2) of the Act, provides that while considering the lawful increase in the standard rent, the Rent Controlling Authority shall fix an amount which appears to it to be reasonable having regard to the provisions of section 8 of the Act. Section 10 (4) of the Act, empowers the Rent Controlling Authority to fix the rent under section 10 of the Act in case it is not possible to determine the standard rent of any accommodation on the principles set forth under section 7 of the Act, and the rent so fixed by the Rent Controlling Authority would be reasonable having regard to the situation, locality and condition of the accommodation, amenities provided therein and the standard rent payable in respect of similar accommodations in the locality. Section 10(5) of the Act, provides that the standard rent fixed by the Rent Controlling Authority would be for a tenancy of 12 months and the monthly rent in such cases would be determined proportionately.
21. In the case of Mukundlal Agrawal (supra) on which the learned counsel for the respondents has placed heavy reliance, the dispute regarding the initial fixation of standard rent in respect of an 19 accommodation under section 7 (1) and (2) of the Act came up for consideration before a Division Bench of this court which discussed the co-relation of sections 7 and 10 of the Act, and thereafter went on to hold that the reasonable rent which the Rent Controlling Authority is required to fix under section 10 (2) of the Act, is not controlled by the expression 'standard rent' defined under section 7 of the Act, in the following terms:-
“10. This being the nature of the power and discretion exercised by the Rent Controlling Authority under Section 10(1) and (2), it cannot be argued with any degree of force that Section 7 contains a definition of "standard rent" in relation to the accommodation mentioned in the three clauses of that provision, and it is the 'standard rent' so defined which the Rent Controlling Authority has to fix as reasonable rent of the accommodation, or that any of the clauses of Section 7 clinches the matter of fixation of 'reasonable rent' under Sub-sections (1) and (2) of Section 10. Section 7 no doubt begins by the expression "Standard rent in relation to any accommodation means". But notwithstanding the use of the word 20 "means", it cannot in the face of Section 10(2) be regarded as a definition of 'reasonable rent' which the Rent Controlling Authority is required to fix under Section 10(1) and (2). ...”
22. Apart from the aforesaid observations, wherein it has been held that the power to fix the rent under section 10(2) of the Act, is not controlled by section 7 (1) (2) of the Act, the decision of the Division Bench in the case of Mukundlal Agrawal (supra) has no applicability to the facts and circumstances of the present case or for the decision of the issue involved in the present appeal as the aforesaid Division Bench was not called upon to decide the question as to whether the provisions of the Act provided for increase of the standard rent once fixed under the Act or that an application for increase of the rent was not tenable and therefore, the provisions of section 7(3) 8, 9 and 10(2), (4) and (5) of the Act, did not come up for consideration before the Division Bench in the aforesaid decision.
23. In view of the aforesaid, it is clear that the reliance placed by the learned senior counsel for the respondents on the aforesaid decision of the Division 21 Bench in respect of the issue raised in the present case is misconceived as the facts of the present case and the issue involved in it are totally different.
24. What emerges from an analysis of the provisions of sections 7(3), 8, 9 and 10 of the Act, is that the meaning of 'standard rent' mentioned in section 7(3) of the Act, is dependent upon the annual rent determined under the municipal assessment which is revised from time to time under the municipal laws; that the landlord is entitled to lawfully increase the rent by 10% per year in cases which fall under sub section (1) of section 8 of the Act, while he is entitled to lawfully increase the rent for recovering any charges towards electricity, water or other charges levied by the local authority as well as the tax by getting the standard rent fixed on re-assessment of the tax or by incorporating such a term in the agreement under section 8(2) of the Act; that the Rent Controlling Authority has the power under section 10 of the Act, not just to fix the standard rent but also to increase the same as referred to in section 8 of the Act; that the Rent Controlling Authority has the power to fix a reasonable amount as standard rent even 22 apart from the provisions of section 7 of the Act, in accordance with the guidelines as laid down in section 10(2) and (4) of the Act; that the standard rent, fixed by the Rent Controlling Authority, would be only for a tenancy of 12 months under section 10(5) of the Act, and that a conjoint reading of various sub sections of section 10 of the Act makes it abundantly clear that reasonable rent determined by the Rent Controlling Authority under section 10 (2) or section 10(4) of the Act is not limited, fixed or confined to the meaning of the words 'standard rent' contained in section 7 of the Act not is it fixed for perpetuity but can be sought to be increased as and when such a request is made in accordance with the provisions of the Act.
25. At this stage, it is pertinent to take note of the general guidelines and norms fixed by the Supreme Court in the case of Mohd. Ahmad (supra) for such type of litigation between the landlord and the tenant, issued in exercise of powers under Article 142 of the Constitution of India which are binding on all concerned, in the following terms:-
“21. According to our considered view majority of these cases are filed because the landlords do not get reasonable rent akin to 23 market rent, then on one ground or the other litigation is initiated. So before saying omega, we deem it our duty and obligation to fix some guidelines and norms for such type of litigation, so as to minimise landlord-tenant litigation at all levels. These are as follows:- (i) The tenant must enhance the rent according to the terms of the agreement or at least by ten percent, after every three years and enhanced rent should then be made payable to the landlord. If the rent is too low (in comparison to market rent), having been fixed almost 20 to 25 years back then the present market rate should be worked out either on the basis of valuation report or reliable estimates of building rentals in the surrounding areas, let out on rent recently. (ii) Apart from the rental, property tax, water tax, maintenance charges, electricity charges for the actual consumption of the tenanted premises and for common area shall be payable by the tenant only so that the landlord gets the actual rent out of which nothing would be deductible. In case there is enhancement in property tax, water tax or maintenance charges, electricity charges then the same shall also be 24 borne by the tenant only. (iii) The usual maintenance of the premises, except major repairs would be carried out by the tenant only and the same would not be reimbursable by the landlord. (iv) But if any major repairs are required to be carried out then in that case only after obtaining permission from the landlord in writing, the same shall be carried out and modalities with regard to adjustment of the amount spent thereon, would have to be worked out between the parties. (v) If the present and prevalent market rent assessed and fixed between the parties is paid by the tenant then the landlord shall not be entitled to bring any action for his eviction against such a tenant at least for a period of 5 years. Thus for a period of 5 years the tenant shall enjoy immunity from being evicted from the premises. (vi) The parties shall be at liberty to get the rental fixed by the official valuer or by any other agency, having expertise in the matter. (vii) The rent so fixed should be just, proper and adequate, keeping in mind, 25 location, type of construction, accessibility to the main road, parking space facilities available therein etc. Care ought to be taken that it does not end up being a bonanza for the landlord.”
26. From a perusal of the aforesaid decision of the Supreme Court and the guidelines and norms fixed therein, it is clear that the Supreme Court has also directed periodical enhancement of rent to avoid unnecessary litigation between the landlord and the tenant.
27. In view of the aforesaid analysis of the provisions of the Act, the decision of the Division Bench in the case of Mukundlal Agrawal (supra) and in conclusion, I am of the considered opinion that section 7 of the Act, does not fix but only elaborates the meaning of “standard rent”. and does not deprive the Rent Controlling Authority of the discretion, power and authority to determine a reasonable rent as standard rent of an accommodation under section 10 (2) or 10(4) of the Act. I am also of the considered opinion that the standard rent once fixed can be increased on an application being filed by the landlord 26 or tenant, as the case may be under section 9 of the Act, and that the increase can be sought on the following amongst other grounds, namely, in case the annual rent for the purpose of assessment of tax by the municipal authority is changed or revised as provided under section 7(3)(a) of the Act, in case the landlord undertakes construction, addition, alteration etc., then, to the extent of 10% as provided under section 8 (1) of the Act, in cases where the landlord is required to pay electricity, water or other charges to the local authority or in case of enhancement of tax by incorporating such a clause in the agreement as provided under section 8(2) of the Act or on the basis of the factors mentioned under section 10(4) of the Act where it is not possible to determine the standard rent in accordance with the provisions of section 7 of the Act. The rent of the accommodation may also be increased in accordance with the guidelines and norms issued by the Supreme Court in paragraph 21 of the judgment rendered in the case of Mohd. Ahmad (supra).
28. Consequently, the orders of the court below dated 29.6.2009 as well as the Rent Controlling Authority dated 13.10.2008, wherein it has been held 27 that the rent can only be enhanced to the maximum extent of 10% by taking into consideration the provisions of section 8(1) of the Act, in total ignorance of the provisions of sections 7(3) (a), 8(2), 10(2), (4) and (5) of the Act, as well as the finding to the effect that the standard rent once fixed cannot be changed or enhanced, are erroneous and contrary to law.
29. The order passed by the appellate court dated 29.06.2009 and the order of the Rent Controlling Authority, Sagar, dated 13.10.2008 are accordingly quashed and set aside and the matter is remitted back to the Rent Controlling Authority, Sagar to decide the application of the appellant for increase of the rent by determining and fixing the reasonable rent in respect of the accommodation in question in accordance with the analysis and interpretation of the provisions of the Act as made above as well as the guidelines and norms issued by the Supreme court in the case of Mohd. Ahmad (supra).
30. With the aforesaid directions, the appeal is allowed. In the facts of the case, there shall be no order as to the costs. (R.S. Jha) Judge msp