Gopichand Vs. Dhannalal - Court Judgment

Modi, J.

1. This is a reference by a learned Single Judge and the question referred to us as arising out of the first proviso to Sub-section. (2) of Section 6 of the Rajasthan Premises (Control of Rent and Eviction, Act, 1950 (Act No. 17 of 1950) (hereinafter called the Act) has been formulated as follows :

'In cases of premises first let out after 1-1-48 can the standard rent be fixed below the basic rent thereof ?'

2. In order to appreciate the point referred to us a few facts may be stated. The tenant who is the respondent before us filed a suit for fixation of standard rent with respect to the suit shop for which a rent of Rs. 60/ had been agreed by him to be paid to the landlord. The latter resisted the suit on the ground that the whole shop had been let out by him to the respondent for the first time on the 1st day of February, 1957 and, therefore, the standard rent could not be fixed below the figure of Rs. 60/- per mensem, which according to him, was the basic rent within the meaning of Section 6 (2) of the Act. This plea was repelled by the trial Court which held, that the agreed rent was excessive and consequently it was fixed at Rs. 40/- per mensem. The landlord went up in appeal to the Senior Civil Judge, Jaipur, who modified the standard rent fixed by the trial Court and raised it to Rs. 44/- per mensem. Thereupon the landlord preferred the present revision, which came for disposal before a learned Single Judge of this Court. One of the points raised before him was that in the case of premises first let out after 1st January, 1946, the rent agreed between the parties would be the basic rent and that being so the Courts would not be justified in fixing the standard rent below that limit.

The learned Single Judge seems to have been Inclined to accept this view but he was faced with the decision of Wanchoo C. J. in Gurbux Rai v. Aman Singh, ILR (1955) 5 Raj 3 78. The precise point which has been raised in this case came up for consideration before the learned Chief Justice, as he then was, and he held as follows :

'The argument on behalf of the opposite parties is that under this proviso (this is the first proviso to Sub-section (2) of Section 6) the rent agreed upon, in case premises are let out, for the first time, after January, 1946, is the basic rent, and the standard rent to be fixed by the Court must be the basic rent. I am of the view that this is not the correct interpretation of this proviso. The proviso does not say that in such a case the standard rent shall be equal to the basic rent. It only says that the standard rent shall not exceed the basic rent. It does fix a maximum but does not fix a minimum. In these circumstances, the power of the Court to reduce the rent agreed upon in case it is found to be excessive is still there, and the Court can proceed under Sub-section. (3).'

3. As against this reliance was placed by the landlord on the observations made in a Bench decision of this Court in Shambhu Ram v. Kanhiyalal, ILR (1955) 5 Raj 253, to which one of us was a party. The relevant observations are to the following effect:

'It appears to us that while one of the main objects of the Act was certainly to afford security of their tenancy rights and protection against excessive rents to the tenants, the trainers of the Act also intended that the landlords may not be denied some increase in the rents which were fixed years ago, say in 1942 or 1943 or earlier, and had become entirely out of harmony with the prevailing conditions in 1950. 'We may make it clear in this connection that the intention of the Act clearly appears to us to be that no variation in the rents of tenancies dating from after the 1st January, 1946, is as a rule contemplated by the Legislature.' Any rents fixed before that date appear to us to be susceptible to variation within the limitations provided under the Act. A ceiling was, however, fixed for such increase which is not to exceed 50 per cent in the case of residential properties or properties devoted to certaia educational or public purposes specified in Clause (a) of Sub-section (2) of Section 6; and in the case of other properties the maximum is fixed so as not to exceed two and a half times the basic rent, which has been defined to be the rent payable on the 1st January, 1943, or in the case of tenancies arising subsequently, on the date of commencement thereof.' The underlining (here in ' ') is ours.

We may point out at this place that this decision (wherein the above observations were made though the question there was somewhat different) does not appear to have been brought to the notice of the learned Chief Justice when he decided the case of ILR (1955) 5 Raj 378.

4. Be that as it may, the question has been pointedly referred to us as to whether the view taken in Gurbux Rai's case, ILR (1955) 5 Raj 378 is the correct one.

5. In order to properly appreciate the point raised before us it is necessary to read Section 6 in so far as it is material for our purpose at this place :

'6. Fixation of standard rent :

(1) Where no rent has been agreed upon or where for any reason the rent agreed upon is claimed to be excessive, the landlord or the tenant may institute a suit in the lowest Court of competent jurisdiction for fixation of standard rent for any premises.

(2) The Court shall, after holding such summary inquiry as it may consider just and necessary, determine the standard rent for such premises and shall, in doing so, act according to the following principles, namely :

(a) Where the premises are let for residential purposes or for any of the purposes of a public hospital, Aushadhalaya or Dawakhana, a recognised educational institution, a public library or reading room or any orphanage, the standard rent shall riot exceed the basic rent increased by fifty per cent thereof; and

(b) where the premises are let for any other case, the standard rent shall not exceed two and a half times the basic rent thereof.

Provided that where the premises have been first let after the first day of January, 1946, the standard rent shall not exceed the basic rent thereof;

Provided ...........

Explanation--For the purposes of this Sub-section the basic rent of any permises shall mean the rent at which the premises were let on the first day of January, 1943 and, if not let on that day, the rent at which they were first let after that day.

(3) Where for any reason it is not possible to determine the standard rent of any premises on the principles set out in Sub-section (2), the Court shall determine such rent, having due regard to the pre-war rent, the prevailing rent or standard rent for similar premises, in the same locality, the various amenities (such as electricity, water connection, sanitary fittings, and the like) attached to the premises, the cost of construction, maintenance and repairs thereof, the special reasons, if any, proved by the plaintiff, and other relevant considerations.

(4) ..............

(5) :.............'

6. The principal question for our determination on the language of Section 6 is as to the precise connotation of the words 'basic rent' as used in the section. Three expressions in this connection seem to us to have been used in the second chapter of the Act which deals with the matter of rent. Section 5 deals with agreed rents and provides that ordinarily the rent payable for any premises to which the Act applies shall be the rent as may be agreed upon between the landlord and the tenant subject of course to the other provisions of the Act. Then occurs the expression 'standard rent.' And this comes into play where (1) either no rent has been agreed upon between the parties, or (2) where the rent agreed upon is contested to be excessive. In both these cases a claim for fixation of standard rent would arise. The further question naturally arises how is the standard rent to be fixed. And it is in this connection that the third expression, namely, 'the basic rent', with which we are principally concerned in the case, has been used by the framers of the Act.

Broadly speaking the provision is that in fixing the standard rent the Court must have regard to the basic rent, and then apply certain rules which have been enacted for this purpose. Again with a view to achieve the same objective premises have been classified into two broad classes,--(1) those which have been first let after the first day of January, 1946; and (2) those which have been so let before that date. The proviso to Sub-section (2) lays down that in the first category of cases, that is, where the premises have been first let after the first day of January, 1946, the standard rent 'shall not exceed the basic rent thereof.' It follows that in the case of premises which fall in the second category that is, which have been let out prior to the 1st January, 1946, the standard rent can be fixed at a rate higher than the basic rent, and the maximum limits for such increase in the case of properties as they fall within Clause (a) or Clause (b) of Sub-section (2) of Section 6 have been fixed respectively so as not to exceed the basic rent by 50% or 250 per cent as the case may be.

The question still remains, however, what is the basic rent and the answer to this is provided in the explanation to Sub-section (2) of Section 6, which lays down that the basic rent shall mean the rent at which the premises were let on the first day of January, 1948, and, if not let on that day, the rent at which they were first let after that day.

7. Bearing in mind the entire setting in which the term 'basic rent' has been used in Section 6 as contradistinguished from the term 'standard rent' or the 'agreed rent', we are inclined to the view that where the premises have been first let after the first day of January, 1948, as in the present case, the standard rent cannot be fixed at a rate different from what is the basic rent, that is, the rent at which they happened to have been first let in such cases. The proviso itself says that the standard rent in such cases shall not be in excess of the basic rent. The only further controversy is whether it can be fixed so as to be less than the basic rent the ground being that the proviso does not in so many words say so. With all respect, we do not think that that can be. The principal reason which has induced us to come to this conclusion is that the word 'basic' in the phrase 'basic rent' has a significance of its own. The word 'basic' is derived from the noun 'base' which means the 'bottom' or 'foundation', so that when a thing is described as 'basic' it seems to us that there can be no legitimate occasion for, or possibility of going below the base.

Let us give an example to make our meaning clear. Suppose in advertising for a post the authority concerned says that graduation in arts or commerce would be a basic qualification. Can a person who has a lower qualification than that claim to be considered for the post Our answer is definitely 'No'; the adjective 'basic' before qualification unquestionably implies that that is the 'minimum' qualification required, though a person possessing a higher qualification, say, a master's degree in arts or commerce would certainly be eligible to be considered. It appears to us that it is in this sense that the word 'basic' has been used in Clauses (a) and (b) of Sub-section (2) of Section 6. The basic rent, therefore, is that quantum of rent as to which no reduction seems to us to be possible. It may be susceptible of an increase where, for example, the conditions mentioned in Clauses (a) or (b) of Sub-section. (2) of Section 6 are satisfied, and the case does not fall within the proviso thereto.

We are also inclined to think that if the intention of the framers of the Act should have been that the basic rent could also be reduced, then, in the first place, it would be a misnomer to characterise it as a basic rent, and, in the second place, some machinery should have been laid down for the reduction of such rent with specific reference thereto. It also seems to us that the framers of the Act thought when they enacted it in 1950 that the legitimate interests of the tenants in the matter of fixation of a fair or a standard rent would be amply safeguarded if their rents were to be regulated on the base or level thereof as it existed on the first day of January, 1943, any increase in rents during the intervening period on account of: rise in prices or scarcity of accommodation being broadly speaking excluded from consideration for that purpose.

8. Having regard to all these considerations, the conclusion at which we have arrived is that when the legislature provided in the case of premises which were first let after the 1st day of January, 1946, that the standard rent shall not exceed the basic rent thereof, its intention in substance was that the standard rent should be fixed as equal to the basic rent, neither more nor less.

9. We may, however, add that this would hold good only in the case of properties in respect of which it can be said that they carried a basic rent. Where, however, this is not possible, for example, where no rent had at all been fixed between the parties, even though the premises had been first let after the first day of January, 1946, then the machinery provided in Sub-section. (2) of Section 6 would not be capable of being pressed into service, and it is in such cases that Sub-section. (3) is really intended to and will have its full play. In other words, as to this class of cases the Court shall have to determine the standard rent not with respect to any basic rent which it is impossible to fix or discover, but having regard to the considerations specified in that Sub-section, that is, the pre-war rent, the prevailing rents in the locality, or the standard rent for similar premises in the same locality, the various amenities attached to the premises, the cost of construction, maintenance and repairs thereof and so on and so forth. But what we wish to emphasise even at the risk of some repetition is that this Sub-section will have no play whatsoever where the premises in dispute can be said to have a basic rent within the meaning of Section 6, and where they have been let out after the 1st of January, 1948, and thus fall within the ambit of the first proviso to Sub-section. (2) of Section 6 of the Act.

10. For the reasons mentioned above, our answer to the question referred to us is this : In cases of premises let out after 1-1-1946 the standard rent cannot be fixed below the basic rent thereof, subject, however, to the rider that such properties do have a basic rent within the meaning of the Explanation to Sub-section. (2), and where it is not possible to have this basis, then Sub-section. (3) of Section 6 will be called into operation and rent will be fixed having regard to the considerations specified therein.

11. Let this answer be returned to the learned Single Judge for the final disposal of the revision application before him.