Zakiya Begum & Ors vs Shanaz Ali & Ors

the landlords of the property bearing No.

28/1, Robertson Road, Frazer Town, Bangalore -

5, measuring 43 feet North, South 37 feet 9

inches, East 25 feet and West 25 feet, the

property included 6 feet wide passage leaving

from Robertson Road into the scheduled

premises (herein after referred to as the said

`premises'). The appellants became the owner

of the scheduled premises by virtue of a Gift

Deed dated 30.3.2000 executed by the husband

of appellant No. 1 and the father of

appellants No. 2 and 3.

5. The appellants inducted the respondents as

tenants on a monthly rent of Rs.4000/- (Four

Thousand Only) per month in respect of the

said premises. The rent was agreed in

accordance with clause 4 of the rent agreement

dated 06.11.1997.

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6. On or about 21.3.01 the appellants instituted

an eviction proceeding being H.R.C. No.

10042/2001 against the respondents under

Section 21 (1) (h) and (f) of Karnataka Rent

Control Act, 1961 (herein after "the 1961

Act"), inter alia, on the grounds of default,

subletting, reasonable and bonafide

requirements and some other grounds.

7. In the said eviction proceeding, the

respondents filed an IA being, IA 8 of 2006,

wherein it was contended by the respondents

that during the pendency of the eviction

proceeding, under Section 21(h)(f) of the 1961

Act, Karnataka Rent Act 1999 (herein after,

"1999 Rent Act") has come into effect

repealing the 1961 Act and it was further

contended that the eviction proceeding will

have to be dealt with under the provisions of

the 1999 Rent Act. The appellants also amended

their eviction proceedings in accordance with

3 the 1999 Rent Act and the respondents gave

their objections to the same.

8. The main objection of the respondents in IA 8

is that admittedly they are tenants on a

monthly rental of Rs.4000/- and as such the

eviction proceeding is not maintainable in

respect of the premises under the 1999 Rent

Act as the same is not applicable to premises

where the monthly rental exceeds Rs.3500/-. It

was, therefore, urged that the Court of Small

Causes has no jurisdiction to try the said

eviction proceeding as the 1999 Rent Act does

not apply.

9. By an Order dated 18.01.2007 the Court of XVth

Additional Small Causes Judge, inter alia,

held that "since the monthly rent of scheduled

premises exceeds Rs.3500/-, hence the

Karnataka Rent Act, 1999 is not applicable and

this Court has no jurisdiction to try the case

and the petition is not maintainable before

this court". Saying so, IA 8 was allowed by

4 the XVth Additional Judge of the Small Causes

Court.

10. That led the appellants to challenge the said

order of the Small Causes Court before the

High Court.

11. It may be noted that neither before the High

Court nor before this Court the applicability

of the 1999 Rent Act, which came into effect

in November 2001, was questioned by the

appellants. Rather acknowledging its

applicability to the pending eviction

proceeding the appellant amended the same in

accordance with the 1999 Rent Act.

12. It is very clear from Section 70 of the 1999

Rent Act that unless proceedings initiated

under the 1961 Act has reached the stage of

execution of a decree, 1961 Act will have no

application to other eviction proceedings

which are pending, prior to the execution

stage, on the date of coming into effect of

the 1999 Rent Act.

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13. The provisions of repeal and savings under

Section 70 of the 1999 Rent Act, particularly

provisions of Section 70(1) and (2) are set

out below:

"70. Repeal and Savings.- (1) The Karnataka Rent Control Act, 1961 (Karnataka Act 22 of 1961) is hereby repealed.

(2) Notwithstanding such repeal and subject to the provisions of section 69,-

(a) all proceedings in execution of any decree or order passed under the repealed Act, and pending at the commencement of this Act, in any Court shall be continued and disposed off by such Court as if the said enactment had not been repealed;

(b) all cases and proceedings other than those referred to in clause (a) pending at the commencement of this Act before the Controller, Deputy Commissioner, Divisional Commissioner, Court, District Judge or the High Court or other authority, as the case may be in respect of the premises to which this Act applies shall be continued and disposed off by such Controller, Deputy Commissioner, Divisional Commissioner, Court, District Judge or the High Court or other authority in accordance with the provisions of this Act.

(c) all other cases and proceedings pending in respect of premises to which this Act does not apply shall as from the date of commencement of the Act stand abated."

6 14. The learned counsel for the appellants urged

that in view of the provisions of Section

2(3)(e)(i) of the 1999 Rent Act, the decision

of the Small Causes Court is bad in law and

cannot be sustained.

15. In order to appreciate these controversies the

relevant Section is set out below.

"2(3) Nothing contained in this Act shall apply,-

(a) xxx

(b) xxx

(c) xxx

(d) xxx

(e) to any premises, deemed rent on the date of commencement of this Act or the standard rent of which exceeds,-

(i) three thousand five hundred rupees per month in any area referred to in Part A of the first schedule; and

(ii) xxx"

16. The learned counsel for the appellants

submitted that the non-applicability of the

1999 Rent Act is only on the basis if in the

tenanted premises the deemed rent or the

standard rent exceeds Rs.3500/- on the date of

commencement of the new Act of 1999 Rent Act.

7 It was urged that such standard rent is one

which is fixed under Section 7 of the Act and

it was argued that merely because the agreed

rent is Rs.4000/- per month in respect of the

schedule premises, the Small Causes Court

should not have allowed the application of the

tenant.

17. In order to decide this controversy, the

provisions of Sections 6 and 7 of the 1999 Act

are to be taken into consideration. Provision

of Sections 6 and relevant provisions of

Section 7 of the said Act are set out below.

"6. Rent payable.- (1) The rent payable in relation to a premises shall be,-

(a) the rent agreed to between the landlord and the tenant as enhanced in the manner provided in the Third Schedule; or

(b) the standard rent specified under section 7, as revised under section 9. (2) In the case of a tenancy entered into before the commencement of this Act, the landlord may, by notice in writing to the tenant within three months from the date of such commencement, enhance the rent as specified under section 7, and the rent so enhanced, shall be payable from the date of such commencement.

8 7. Standard rent.- (1) Standard rent in relation to any premises, shall be the rent calculated on the basis of ten per cent per annum of the aggregate amount of the cost of construction and the market price of the land comprised in the premises on the date of commencement of the construction:

Provided that the standard rent calculated as aforesaid shall be enhanced in the manner provided in the Third Schedule.

(2) For the purpose of this section,-

(a) cost of construction shall include cost of electrical

fittings, water pumps, overhead tanks, storage tank and other water, sewerage and other fixtures and fittings affixed in the premises;

(b) in case any fixture and fittings referred to in clause (a) are in common use by more than one occupant in a building, such proportion of cost of the fixtures equipment and fittings shall be included in the cost of construction of the premises as bears proportion to the plinth area of such premises to the plinth area of that building;

(c) the cost of construction shall be the actual amount spent on construction, and in a case where such amount cannot be ascertained, such cost shall be determined as per the scheduled rates of the State Public Works Department for cost of construction for similar

9 construction for the year in which the premises was constructed;

(d) the market price of the land shall be the price for which the land was bought as determined from the deed of sale registered under the Registration Act, 1908 (Central Act 16 of 1908), if construction commenced in the year of registration or the land rates notified by the State Government or a local authority for the year in which construction was commenced, whichever is higher;

(e) the land comprised in the premises shall be the plinth area of the building and such of the vacant land up to fifty per cent, of the plinth area as is appurtenant thereto;

(f) in a case where a premises forms part of a building having more than one premises, such proportion of price of land forming part of such building shall be taken to be the market price of the land comprised in the premises as is equal to the proportion of the plinth area of such premises to the plinth area of that building;

(g) notwithstanding anything contained in clauses (c) and (d), the cost of construction and the market price of the land comprised in the premises purchased from or allotted by the Government or a local authority shall be the aggregate amount payable to such Government or the local authority for the premises:

10 Provided that the Controller may, for the purpose of arriving at, the cost of construction and the market price of the land comprised in the premises, allow in addition, subject to a maximum of thirty per cent of amount payable to the Government or the local authority, to the amount so payable for any expenditure incurred by the landlord or by the first or any subsequent purchaser or allottee for any improvement, addition or structural alteration in the premises."

18. The Hon'ble High Court did not accept the

contention of the appellants and dismissed the

revision petition filed by the appellants.

19. We are also inclined to agree with the view

taken by the Hon'ble High Court for the

reasons indicated below.

20. The 1999 Rent Act (Karnataka Act 34 of 2001)

was brought into existence to remedy problems

of urbanisation and to give protection of this

only to certain categories of tenants and in

respect of some kinds of tenanted premises.

Before enacting this law, recommendations of

Economic Administration Reforms Commission and

11 the National Commission on Urbanisation were

considered.

21. On the recommendations of those two

commissions, this new legislation was brought

in to balance the interests of both the

landlord and the tenant and the new law was to

provide for regulation of rent and eviction in

the spirit of modern economy and it was

designed to replace the 1961 Rent Act.

22. From the statement of objects and reasons some

of the features of the 1999 Rent Act are

clear. The application of the Act is

restricted to,-

(i) to any residential building the Standard rent of which does not exceed rupees 3,500 per month in the areas covered by Karnataka Municipal Corporation Act, 1976 and rupees 2,000 per month in other areas and a commercial building having plinth area of not exceeding 14 square meter.

(ii) to buildings which are more than 15 years old.

(2) The Rent Deed is required to be in writing and registered. (3) Tenancy is made inheritable to a limited extent.

12 (4) Provision is made,- (a) for collection of standard rent

in relation to the investment on property and for enhancement of rent, and for determination of Standard Rent by Rent Controller;

(b) for registration of middlemen and estate agents;

(c) for adjudication of eviction application by Rent Courts, with only Right of Revision, but no appeal;

(d) for immediate eviction of tenants of State or Central Government Employees, members of Armed Forces, widows, handicapped persons and persons above the age of 65 years under certain circumstances;

(e) to laydown Special Procedure for trial of cases before the controllers and also the Courts so as to achieve quick disposals and negotiated settlement.

(f) to impose certain Special obligations on the landlords and tenants, etc."

23. Therefore 1999 Rent Act is a socio-economic

legislative measure and is designed to give

protection to certain classes of tenants. A

tenant who is paying deemed rent or standard

rent above Rs.3500/- in respect of his

tenanted premises on the day of commencement

of the new Act is outside the purview of the

Act.

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24. Under Section 6 of the Act, set out

hereinabove, rent payable in respect to the

premises is the rent agreed between the

landlord and tenant as enhanced in the manner

provided in the Third Schedule or the standard

rent as specified under Section 7 and revised

under Section 9.

25. Insofar as deemed rent on the date of

commencement of the Act is concerned, the same

has been explained under Explanation to

Section 2(3)(e) which is set out below.

"Explanation.- "Deemed rent on the date of commencement of this Act"

shall be the rent calculated in the manner provided in section 7, together with revision, if any, as provided in section 9 and decreased in the case of premises constructed after the commencement of this Act at the same rate as the rate of enhancement stipulated in the third Schedule to reflect the position on the date of commencement of this Act"

26. A perusal of the said Explanation would show

that the deemed rent refers to Sections 7 and

9 of 1999 Rent Act.

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27. In the instant case, the agreed rent is

Rs.4000/- which comes within the definition of

Section 6(1)(a) and the said agreement was

admittedly entered into between the appellants

and respondents prior to the commencement of

the 1999 Rent Act.

28. In a case where there is an admitted agreed

rent, the question of fixation of standard

rent does not arise.

29. An explanation to a Section should normally be

read to "harmonise with and clear up any

ambiguity in the main Section" and normally

not to widen its ambit. (See Bihta Co-

operative Development and Cane Marketing Union

Ltd., and another vs. Bank of Bihar and others

- AIR 1967 SC 389 at page 393 and M/s. Oblum

Electrical Industries Pvt. Ltd., Hyderabad vs.

Collector of Customs, Bombay - AIR 1997 SC

3467 at page 3471).

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30. In the instant case the agreed rent is the

deemed rent since there is no dispute about

the quantum of agreed rent before the coming

into force of this Act.

31. For the reasons aforesaid, this Court does not

find any error in the reasoning of the High

Court and the appeal is accordingly dismissed.

No order as to costs.

.....................J. (G.S. SINGHVI)

.....................J. (ASOK KUMAR GANGULY) New Delhi August 09, 2010

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