Madras High Court
Srinivasa Gounder vs K. Venkatesan on 25 July, 1997
Equivalent citations: (1998)1MLJ296
JUDGMENT S.S. Subramani, J.
1. Both these revision petitions arise from H.R.C.O. R No. 96 of 1992, which is a petition for fixation of fair rent. Landlord filed the same. The agreed rent was Rs. 600, and the tenant is making use of the same to conduct a bar by name 'Simla Bar'.
2. It is the case of the landlord that the premises in question is situated in Jawaharlal Nehru Street, Pondicherry, which is a big market place. It consists of a ground floor and a room in the first floor. The built-up area is 112.54 sq. metres., and the value of the building including the site will be Rs. l1,50,000. According to him, he is entitled to get the rent fixed at Rs. 10,500 per month.
3. In the counter-statement filed by the tenant he admitted the rental arrangement. According to him, most of the basic amenities are not available. Even the plinth area of the building is disputed. According to him, the claim of the landlord is very excessive, and the agreed rent is reasonable.
4. Rent Controller, as per Order dated 31.7.1995, held that the landlord is not entitled to any relief, and accordingly dismissed the petition. Rent Controller was of the view that the landlord has not proved either the value of the property, and the various exhibits filed before court are not relevant. The valuation statement filed by C.W. 2 was found to be of no use for fixing the rent. Since no materials had been placed before the Rent Controller, he was of the opinion that the fair rent could not be fixed, and the petition was dismissed with costs.
5. Aggrieved by the Order of Rent Controller, land-lord filed an appeal as M,A. No. 20 of 1995, on the file of Principal District Judge at Pondicherry. The Appellate Authority, after considering the entire evidence, held that the fair rent will be Rs. 3,000 per mensem. The Appellate Authority, came to the con-clusion that the evidence of P.W. 2 cannot be accepted. It also came to the conclusion that there is no proper classification made regarding the nature of building. The land value was fixed at Rs. 2,30,000, and the building was valued at Rs. 70,000. The total value of the premises was said as Rs. 3,00,000 and on that basis fair rent was fixed at Rs. 3,000. It is this order judgment of the Appellate Authority which is challenged by the landlord and tenant in both these Revisions.
6. After hearing learned Counsel on both sides and also after perusing the evidence, I am of the view that the entire matter deserves reconsideration. An application for fixation of fair rent cannot be dis-missed, and the procedure adopted by the Rent Controller is wrong. If no evidence is let in, law presumes that the agreed rent should be fixed as fair rent. The Appellate Authority has also committed a serious error in fixing the rent at Rs. 3,000. The main reason for fixing the rent at Rs. 3,000 was, the fixation of land value at Rs. 2,30,000. For fixing the land value at Rs. 2,30,000, there was no evidence at all by the landlord. The market value of the property cannot be decided simply on the basis of valuation report on building plan. It has to be fixed on the basis of sale transactions more or less in the same locality having similar advantages, by a willing purchaser from a willing vendor. In this case, the Rent Controller has discarded the Commissioner's Report. The Appellate Authority has relied on the evidence of P.W. I wherein he has said that he ascertained from the office of the Sub Registrar that the value of the land in that locality will be Rs. 275 per sq. ft. That evidence was fully accepted by the Appellate Authority when he said thus: "I hold that it is safe to accept the extent of the land as 12' x 70' and the value as Rs. 275 per sq. ft. as per value given by Sub Registrar. " Thereafter, the Appellate Authority has held that the value of the property is Rs. 2,30,000.
7. In Jawajee Nagnatham v. Revenue Divisional Officer, Adilabad, A.P. and Ors. their Lordships of the Supreme Court held that the Basic Valuation Register maintained by the Collector for the purpose of levy of stamp duty cannot be the basis for determination of market value of the land. The relevant portion of the decision reads thus:
The State Legislature enacted Section 47-A of the Indian Stamp Act which shows that the exercise of the power thereunder is with reference to a particular land covered by the instrument brought for registration. When the registering officer has reasons to believe it to be under-valued, he should get verified whether the market value was truly reflected in the instrument for the purpose of stamp duty; the Collector on reference could determine the same on the basis of the prevailing market value. Section 47-A conferred no express power to the Government to determine the mar-ket value of the lands prevailing in a particular area, village, block, district or the region and to maintain Basic Valuation Register for levy of stamp duty for registration of an instrument, etc. The Basic Valuation Register prepared and maintained for the purpose of collecting stamp duty has no statutory base or force. It cannot form a foundation to determine the market value mentioned thereunder in instrument brought for reg-istration. Equally it would not be a basis to determine the market value under Section 23 of the Act of the lands acquired in that area or town or the lo-cality or the taluk, etc.
8. The said decision was followed by the Supreme Court in U.P. Jal Nigam v. Kalra Properties (P) Ltd wherein their Lordships of the Supreme Court said that 'the basic valuation is only for the purpose of collecting the stamp duty and that, therefore, it cannot form foundation to determine the mar-ket value. '
9. A Division Bench of our High Court has also held that for determination of market value for the purpose of fixation of fair rent under the Tamil Nadu Rent Control Act also, the same principal applies. In paragraph 30 of the judgment, reported in K. Ramanathan and Ors. v. Nalini Jayanthi (1996) 2 1 W. 658 it has been held by the Bench that the evidence must be by examining the persons connected with the sale deed or the transactions. In that case, even though registration copies of sale deeds were produced to determine the market value, their Lord-ships held that they were not sufficient, and persons connected with those transactions have to prove the contents also. I had occasion to consider a similar case in the decision reported in Rahmath Fathima, T.H.S. v. T.K. Kadar Mohideen (1996) 2 L.W. 637. Where I held that for determination of the market value, transaction between a willing purchaser and a willing seller, will have to be considered, and I also held that the value fixed by the Government for the purpose of stamp duty has no relevance. In Paragraph 17 of the judgment, I have said thus:
... The Government fixes the value only for the purpose of Stamp Duty, i.e., for the purpose of its revenue. The value is fixed for the locality and not for a particular survey number. The market value for a particular survey number is the result of a bargain between the parties. That is a matter to be proved by evidence. Judicial notice cannot be taken regarding the value of the property on the basis of a value fixed by the Government.
10. Since the Appellate Authority has relied upon only the hearsay evidence of P.W. I, and that too on the basis of the information ascertained by him from the Sub Registrar's Officer where registers have been kept for the purpose of determining stamp duty, the same cannot be accepted as correct.
11. Learned Counsel for the tenant also contended that under the Pondicherry Rent Control Act, after ascer-taining the market value, only 9% is to be taken as rent payable for the building and not 12% as done under the Tamil Nadu Rent Control Act. The said submission has no force in view of the statutory provisions under that Act. Learned Counsel for revision petitioner has also grievance in the fixation of plinth area of the structure. According to him, this is a building in a row where a wall on the left hand side will be the wall of the neighbouring property owner. If that be so, the plinth area of the building will have to change. The Appellate Authority has also taken into consideration the Class of the building. According to it, it is only a Third Class building, and if so, the depreciation will be 2% and not 1 % as now found by the Appellate Authority. None of these contentions, even though raised in the counter statement, seems to have been taken into consideration by the Appellate Authority. Before the Appellate Authority, land-lord was the appellant, and it seems, the arguments advanced on the side of the appellant alone were taken into consideration. It is well-settled that in a case regarding fixation of fair rent, Court is bound to decide the same according to statutory provisions and not on the basis of mere statement of either party. There is a duty cast on the Court to abide by the statutory provisions and then determine the fair rent. This has not been done by the Appellate Authority, which has (occasioned grave failure of justice.
12. In the result, the civil revision petitions are allowed. The judgment of the Appellate Authority in M.A. No. 20 of 1995 is set aside and the said Appeal is remitted to that Court. On receipt of records, the Appellate Authority shall restore M.A. No. 20 of 1995 to its file, and after giving reasonable opportunity to both parties, to adduce evidence it shall decide the matter afresh in the light of the observations aforementioned. There will be no order as to costs in both the Revision. Parties will appear before the Appellate Authority on 26.8.1997.