Judgment:
Mirdhe, J.
1. This Regular First Appeal is filed by the appellant who was the defendant in the Court below under Section 96 C.P.C. against the judgment and decree dated 22.8.1984 passed by the II Additional City Civil Judge, Bangalore City, in O.S.No. 48 of 1982, decreeing the suit of the respondent for recovery of money.
2. I have heard the learned Counsel for the appellant and the learned Counsel for the respondent fully and perused the records of the case.
3. The respondent filed the suit against the appellant for recovery of a sum of Rs. 13,500/- on the ground that he is the owner of the premises bearing No. 141, 13th Main, 27th Cross, 3rd Block East, Jayanagar, Bangalore, which consists of ground floor and first floor and the appellant was a tenant under him in respect of the first floor of the premises since July 1975 on a monthly rent of Rs. 750/- exclusive of light and water charges and he paid the rents upto the end of February, 1980 and he vacated the premises on 19.8.1981 and he has not paid the arrears of rents from March 1980 to 19th August 1981 and, therefore, he was due in a sum of Rs. 13,750/-. He also further contended that the appellant did not pay the arrears of electricity charges amounting to Rs. 228-02 and also water charges of Rs. 63-60, and he caused damage to the water supply fittings and the respondent had to get it repaired at a cost of Rs. 350/- and, therefore, the defendant is due in a sum of Rs. 14,141-62 which the appellant has not paid in spite of repeated demands. The respondent restricted his claim to a sum of Rs. 13,500/- in the suit. The appellant admitted that the respondent is the owner of the premises in question and he was the tenant of the first floor of the said premises. But, he denied that the monthly rent was Rs. 750/- or that it was exclusive of water and light charges. On the other hand, he has pleaded that the monthly rent was Rs. 175/- inclusive of water and light charges. Though he admitted that he was in possession of the first floor till 19.8.1981, he has denied that he was in arrears of rent from March 1980 to 19.8.1981. He has also denied that he caused any damage to the water fitting or that the respondent had to incur an expenditure of Rs. 350/- for getting it repaired. He has also contended that the plaintiff has filed the suit against him on account of the misunderstanding between his wife and the wife of the respondent. The trial Court raised the following issues:-
'1. Whether plaintiff proves that defendant had agreed to pay monthly rent of Rs. 750/- in addition to light and water charges?
2. Whether plaintiff proves that defendant is in arrears of rent for the period from March 1980 to 18.8.1981 accounting to Rs. 13,750/- ?
3. Is defendant liable to pay electricity charges of Rs. 228-02 and water charges of Rs. 63-60?
4. Does plaintiff further prove the defendant is liable to pay repair charges to the extent of Rs.350/- to water supply fittings?
5. To what relief plaintiff is entitled?
6. What order or decree?'
The respondent examined himself as P.W.1 and the appellant examined himself as D.W.1. The respondent got exhibited Exhibits P1 to P20 in support of his case and the appellant got exhibited Exhibit D1 in support of his case. The lower Court answered the issues and decreed the suit of the respondent for a sum of Rs. 13,500/- with current interest at 6 per cent per annum from the date of the suit till the date of realisation and awarded full costs. Hence this Appeal.
4. The appellant has filed a Memo for permission to raise two questions mentioned in the Memo besides the contention taken by him in his Appeal Memo. Though he has not raised these contentions in the trial Court, he has been permitted to raise them as they do not require any additional evidence and they are mostly questions of law. The questions that the appellant is permitted to raise are as follows:-
'1. Whether the letting of the house is not illegal and against public policy and hence the suit for recovery of rent is maintainable?
2. Whether the agreement to pay Rs. 750/- as rent is not illegal and against public policy and hence the suit for recovery of rent at Rs. 750/- is maintainable?'
Before dealing with the contentions of the appellant on the merits of the case, I will take up these two questions raised by the appellant for consideration first.
(1) It is the contention of the appellant that the letting of the premises to him by the respondent is illegal and against public policy and, therefore, the suit for recovery of rent itself is not maintainable. This contention is taken in view of the facts of the case that the respondent was required to give intimation to the Accommodation Controller regarding the vacancy of the premises and without the premises being allotted to the appellant by the Accommodation Controller the respondent leased out the premises to him. Under Section 4 of the Karnataka Rent Control Act, 1961 (which will hereinafter be referred to as 'the Act'), every landlord is required, within 15 days after the building becomes vacant, to give intimation by Registered Post to the Controller. Sub-section (2) of Section 4 of the Act lays down that no person shall let, occupy or otherwise use any building which becomes vacant without the landlord giving intimation under Sub-section (1) and for a period of 15 days from the date on which the intimation is received by the Controller or within a period of one week after the termination of the proceedings under Section 8, if any, whichever is later. The respondent has stated in his evidence that before the defendant was inducted as a tenant in the premises, he had intimated the vacancy of the premises to the Accommodation Controller and it was released for self-occupation and thereafter he effected the repairs and alterations and then leased it to the appellant. The contention of the learned Counsel for the appellant is that this leasing out of the premises is quite contrary to the provisions of Section 4(2) of the Act. He relied on ANDERSON LIMITED v. DANIEL, 1924(1) KB 138. In that case, the provisions of the Fertilisers and Feeding Stuffs Act, 1906 required every person who sold for use as a fertiliser of the soil any article to give to the purchaser an invoice stating what are the respective percentages (if any) of certain chemical substances contained in the article. The seller had not given the invoice as required by that Act. Their Lordships of the Court of Appeal held as follows:- 'Held, that, as the object of the statute in requiring the vendor to give the statutory invoice and imposing on him a penalty in the event of his default is to protect the purchasers of fertilisers, the effect of non-compliance with the requirement is not merely to render the vendor liable to the penalty, but also to make the sale, illegal and preclude the vendor from suing for the price.'
Another Ruling relied upon by the Counsel for the appellant is MISTRY AMAR SINGH v. KULUBYA, 1963(3) All E.R. 499. In that case, an African, the registered owner of Mailo land, agreed to lease three plots to an Indian, without obtaining the consent made necessary by legislation and then allowed the other persons to remain in possession. Their Lordships of the Privy Council held that the African gentleman was entitled to recover possession because his right to possession did not depend on the illegal agreements, but rested or his registered ownership of the land and the other person who was in possession could not rely on the agreements because of their illegality. The learned Counsel for the appellant relied on these Rulings in support of his contention that leasing of the premises by the respondent to the appellant is opposed to Section 4(2) of the Act and it is against public policy and, therefore, the lease itself is vitiated and the suit for recovery of rent is not maintainable.
5. The reply to this argument is found in the Ruling in MURLIDHAR AGARWAL AND ANR. v. STATE OF UTTAR PRADESH AND ORS., : [1975]1SCR575 . The Supreme Court in that Ruling has held as follows:-
'A lease made in violation of the provisions of Section 7(2) would be valid between the parties and would create the relationship of landlord and tenant between them although ft might not bind the authorities concerned. Therefore, the lessee who had been paying the rent to the lessors was a tenant and permission under Section 3 to file a suit for eviction was necessary.'
The learned Counsel for the appellant submitted that though in view of this Ruling it can be held that a lease made in violation of the provisions of Section 4(2) of the Act will be valid between the parties and will create relationship of landlord and tenant between them, but still the landlord will not be entitled to recover the rent as the contract regarding the lease itself is supposed to public policy. This argument is not acceptable for the simple reason that once the relationship of landlord and tenant is held to be valid, the landlord will be entitled to recover the rent. The Ruling of the Supreme Court in Murlidhar Agarwal and Anr. v. State of Uttar Pradesh and Ors. quoted above is an authority on this point wherein their Lordships have held that the lease made in violation of the provisions of law would be valid between the parties and would create the relationship of landlord and tenant though it may not be binding on the authorities concerned. In this particular case also, the appellant had admitted that he entered into an agreement of lease in respect of the petition premises and he was a tenant. If Section 4(2) of the Act is not followed, it is for the authorities to take appropriate action against the persons responsible for violating the said Section. But, that will not be a ground to hold that there is no relationship of landlord and tenant between the parties.
6. Another Ruling reported in SWAMYDAS v. KRISHNAN, : ILR1985KAR2367 throws light on this point. In that case, the premises in question was allotted by the Karnataka Housing Board to the landlord on lease-cum-sale basis and knowingly the petitioner-tenant had taken the premises on sub-lease from the allottee. It was contended that there was no relationship of landlord and tenant between himself and the allottee of the Housing Board. But, His Lordship of this Court held that the moment the respondent receives rents from the tenant-petitioner, the relationship of 'landlord' and 'tenant' is created in terms of the definition of the terms 'landlord' and 'tenant' under Section 3 of the Act. It is further held in that Ruling that the tenant cannot be permitted to contend that the landlord to whom he has paid rents is not the landlord. His Lordship has also further held that merely because it suits him to expose- the illegal act of his landlord, he cannot be permitted to raise such a plea that too at the stage of revision and not in the first instance when the Petition was resisted before the learned Munsiff. In the instant case, the appellant has been permitted to raise this issue. But, in view of the law discussed above and more so the law discussed by the Supreme Court in Murlidhar Agarwal and Anr. v. State of Uttar Pradesh and Ors. quoted above though leasing of the suit schedule premises by the respondent to the appellant is contrary to Section 4(2) of the Act, there still exists the relationship of landlord and tenant between the parties as the matter of violation of Section 4(2) of the Act was a matter to be considered by the authority concerned under the Act. Since the appellant paid the rents to the respondent, there was a relationship of landlord and tenant between the parties.
7. The learned Counsel for the appellant further contended that though there may be relationship of landlord and tenant between the parties, in view of the said Ruling, still the respondent's suit to recover the amount will not be maintainable as no such suit is contemplated under the Act and the very recovery of the rent wilt be contrary to law. This argument is properly replied by the Ruling in Swamydas v. Krishnan quoted above. Once the relationship between the parties is established as landlord and tenant, the appellant is hound to pay the rent in respect of the premises occupied by him and the basis for the payment of rent is the relationship between the parties that is established in this case by the evidence on record as the appellant himself has admitted the payment of rent to the respondent. Once the relationship of the landlord and tenant is established as in this case, the suit of the landlord to recover the rent is maintainable. Even if the letting of the premises is contrary to the Act, it is not necessary that the authorities should always evict the unauthorised occupant as held by this Court in SEETHA BAI v. ACCOMMODATION CONTROLLER, : ILR1990KAR4072 . It has been held in that Ruling as follows:
'It is not always necessary for the first respondent, under Section 10A, to order eviction of unauthorised occupant. It all depends upon the circumstances, if there is an old tenant though occupied the premises unauthorisedly, the Authority may not exercise the discretion to evict him at all. There may be a tenant who sincerely believed that the building was not covered by the Act and therefore accepted the premises as a tenant due to a wrong information given to him, by the landlord and his situation may warrant a sympathetic consideration of his case and in such a situation, again, the Authority may choose not to order his eviction. The power under Section 10A has to be exercised in a just manner depending upon several factors. Section 10A vests only a discretionary power.'
Hence, Point No. 1 that the appellant was permitted to raise in this case is answered as follows:-
Though the letting of the premises is contrary to the provisions of Section 4(2) of the Act, still there existed the relationship of landlord and tenant between the appellant and the respondent. It was for the authorities concerned to take action against the appellant and the respondent for violation of Section 4(2) of the Act. But that cannot be a ground to hold that there was no relationship of landlord and tenant between the parties in view of the clear admission of the appellant that he was paying rent to the respondent and hence the suit for recovery of the rent was maintainable.
8. The second question which the appellant raised in this Appeal is that the agreement to pay Rs. 750/- as rent is illegal and against public policy and hence the suit for recovery of the rent is not maintainable. The learned Counsel for the appellant based his argument on Section 14 of the Act. Section 14 of the Act deals with fixation of fair rent. It lays down that the landlord or tenant of any building may make an application to the Controller for fixing the fair rent to the building. Section 16 of the Act lays down that when the fair rent of a building is fixed, no further increase in such fair rent shall be permissible except as provided under the Act. But, it is an admitted position in this case that there was no fair rent fixed in this case. When there was no fair rent fixed in this case, Section 16 of the Act will not come into play. Section 16 will come into play only when fair rent is fixed. The contention of the learned Counsel for the appellant that even the agreed rent cannot be recovered unless the fair rent is fixed under Section 14 of the Act cannot be accepted. It has been held in PANCHAKSHARAPPA v. VIJAYAKUMAR, : ILR1985KAR2904 that the rent of the premises is the rent agreed at a particular point of time during the subsistence of the lease. It is further held that it is liable to increase or decrease by agreement. In view of this Ruling the contention of the learned Counsel for the appellant that there cannot be an increase of the rent by the agreement of the parties and if such an increase is there it will be opposed to law is not acceptable.
9. The learned Counsel for the appellant submitted that the ruling in Panchaksharappa v. Vijayakumar is in respect of premium, pugree or consideration. The Ruling lays down in very clear terms that the agreed rent is agreed at a particular point of time during the subsistence of lease liable to increase or decrease by agreement. It is laid down that normally the premium or other consideration like pugree etc., are some things other than the agreed rent. In view of this law laid down by this Court, it is clear that the agreed rent is the rent that is agreed between the parties at a particular point of time and it is liable to be decreased or increased by the agreement of the parties. Therefore, Point No. 2 raised by the the appellant in this case is answered as follows:-
The agreement entered into between the parties is a valid one and the suit filed by the respondent for the recovery of the agreed rent between the parties is maintainable.
10. Now, I will take up the other contentions raised by the learned Counsel for the appellant for consideration.
11. It has been contended lay the learned Counsel for the appellant that the inducting of the tenant is dehors to Karnataka Rent Control Act. This argument is also untenable in view of the clear ruling of the Supreme Court in Murlidhar Agarwal and Anr. v. State of Uttar Pradesh and Ors. quoted above which lays down that though the lease may be made in violation of the provisions of the Act, it would create relationship of landlord and tenant between the parties, though such lease may not bind the authorities concerned who will be-free to take action as deemed fit in the matter. As per the case of the appellant, his previous tenant was paying a rent of Rs. 250/- per month and, therefore the maximum increase that can be allowed under Section 14(4)(ii) is 50 per cent, and not Rs. 750/- as claimed by him. Section 14 of the Act will come into play if a fair rent is there. Fair rent is different from agreed rent. Agreed rent is that the parties agreed between themselves to pay at a particular point of time and the bar of 50 per cent that is there for fixing of fair rent is in relation to rate of rent or rental value and not to the agreed rate between the parties. The case of the respondent was that the appellant was a tenant under him since July 1975 on a monthly rent of Rs. 750/-exclusive of light and water charges and he paid rents upto February, 1980 and vacated the premises on 19.8.1981 and he has not paid rents from March, 1980 to 19th August, 1991 and he was due in a sum of Rs. 13,750/-. The appellant admitted that he was the tenant of the first floor of the suit premises and he contended that the rate of rent was Rs. 175/- inclusive of water and light charges. It is to be noted that he had not disputed that he was in possession of the petition premises till 19.8.1981. The appellant as D.W.1 has admitted in his evidence that he left the premises on 19.8.1981 and cleared the rents due by him. This goes to show that he was in arrears when he left the premises which, according to him, he cleared it off. The building let out to him measures 400 square metres and it has got the amenities of light and water and the evidence also discloses that the appellant was parking his car. The case of the appellant that such premises in Jayanagar can be had for Rs. 175/- inclusive of water and light charges is highly improbable. Exhibit P10 is produced by the respondent and it is the certified copy of the judgment in favour of the respondent as against his previous tenant and it was in respect of the first floor of the premises, and this very premises is leased to the appellant subsequently and Exhibit P10 goes to show that the rent was exclusive of water and electricity charges and it was Rs. 250/- per month. Exhibit P13 is the vacancy report given by the respondent to the Rent Controller on 22.8.1981 i.e. 3 days after the defendant vacated the premises in question. The respondent has shown therein the monthly rent paid by the appellant as Rs. 750/- per month. It is the evidence of P.W.1 i.e. the respondent that he has subsequently leased out the premises at the rental of Rs. 1,500/- per month. Therefore, the evidence of the respondent coupled with the document produced by him goes to show that he has leased out the property to the tenant prior to the occupation of the appellant at a rental of Rs. 250/- per month exclusive of electricity and water charges. He has also stated in his evidence that there was only one common over head tank for both the ground floor and the 1st floor and just before the appellant occupied the 1st floor, a separate over head tank for the first floor was constructed. It is also stated by the respondent in his evidence that there was no separate pooja room for the 1st floor and the same was also provided before the appellant occupied the same. His evidence also discloses that the parapet wall on the rear side which was to a height of only 2' to 2 1/2' was raised to a height of 5' as a safety measure against the children falling there and glazed wash basin, towel rail and mirror were also provided in the dining room and the attached bath room was provided with European Closet and the balcony on the eastern side which measured 6' in width was converted into a sit-out, and portion 14' x 12', thereby providing additional accommodation. There is no ground to disbelieve this evidence of the respondent regarding the improvement made by him for the occupation of the premises by the appellant. In view of the fact that the respondent made improvements stated by him in his evidence, the rent claimed by the respondent at the rate of Rs. 750/- per month appears to be not only probable but also reasonable. The trial Court has assessed all the evidence on record and has rightly held that the appellant was a tenant of the respondent on an agreed rent of Rs. 750/- per month exclusive of light and water charges and he was liable to pay the arrears to the respondent for the period claimed by him. It has been contended by the learned Counsel for the appellant that the alleged rent claimed by the respondent cannot be the agreed or proper rent in view of the assessment register extract produced in the case. In the assessment register extract produced in the case, the annual rental value has been fixed at Rs. 5,200/-. In DEVAN DAULAT RAl KAPOOR ETC. v. NEW DELHI MUNICIPAL COMMITTEE AND ANR. ETC., : [1980]122ITR700(SC) it has been held that the criterion for annual, value of a building is the rent realisable by the landlord and not the value of the holding in the hands of the tenant. It has been further held as follows:-
'The criterion is the rent realisable by the landlord and not the value of the holding in the hands of the tenant. The rent which the landlord might realise if the building were let is made the basis for fixing the annual value of the building. What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value. There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from hypothetical tenant. But where the rent of the building is subject to rent control legislation, this approximation may and often does get displaced.'
Therefore, the annual rental value cannot be a criterion to hold that the rental value mentioned in the assessment register extract is based on the actual rent received by the landlord of this premises. The trial Court has also held that there is no material to indicate that the rental value mentioned in the assessment register extract was fixed with reference to the rent that was actually received by the respondent.
12. The learned Counsel for the appellant had further contended that the respondent has not produced dhakla which he admitted to be with him. But, in re-examination the respondent has clarified that the said dhakla was only a reference book maintained by him. Admittedly the respondent has not produced that reference book. It is only a document maintained by the respondent for his own reference but not a book kept in the usual course of business. Therefore, the production of that book could not have added any more light on the controversy in the case and the trial Court has properly dealt with the law and facts in the case and has come to the correct conclusion that the appellant is in arrears of rent for the period from March 1990 to 18.8.1981 and he is also liable to pay electricity and water charges of Rs. 228-02 and Rs. 63-60 on the basis of the evidence on record. It has also rightly held that the total value of the damage caused to the fence during the appellant's occupation of the petition premises is only Rs. 144/- and the trial Court has been right in decreeing the suit of the plaintiff for Rs. 13,500/- with interest at 6 per cent per annum. I do not find any grounds to interfere with the judgment and decree challenged in this Appeal.
13. Hence, I proceed to pass the following order:-
The Appeal is dismissed with costs of the respondent.