2006 (4) TMI 542 - HC - Indian Laws

Summary

Issues Involved:
1. Fixation of fair rent under the Tamil Nadu Buildings (Lease & Rent Control) Act, 1960.
2. Validity of using guideline value from the Sub-Registrar's Office or valuation register from the Municipality for determining market value.
3. Conflicting judicial decisions on the use of guideline value for fixing market value.

Issue-wise Detailed Analysis:

1. Fixation of Fair Rent:
The landlord filed a petition under Section 4 of the Tamil Nadu Buildings (Lease & Rent Control) Act, 1960, to fix the fair rent at Rs. 5,850/- per month, arguing that the contractual rent of Rs. 425/- per month was insufficient. The tenant resisted, claiming the existing rent was adequate. The Rent Controller, after considering various reports and guideline values, fixed the fair rent at Rs. 2,642/- per month. This decision was upheld by the Rent Control Appellate Authority. The tenant then filed a Civil Revision Petition challenging these orders.

2. Validity of Using Guideline Value:
The primary contention was whether the guideline value maintained by the Sub-Registrar's Office or the valuation register maintained by the Municipality could be used as a basis for fixing fair rent. The tenant argued that the market value should be determined based on actual sale deeds of properties in the area at the relevant time, not on guideline values meant for stamp duty purposes.

3. Conflicting Judicial Decisions:
The Full Bench was tasked with resolving conflicting decisions. One decision (1995 T.L.N.J.226) held that guideline values could be used for fixing land value, while another (1997 (3) LAW WEEKLY 193) held that market value should be based on actual transactions between willing buyers and sellers, not guideline values.

Analysis of Conflicting Decisions:
- 1995 T.L.N.J.226 (N.Sulaiman v. R.Ravichandran): Justice M. Srinivasan held that guideline values could be used in the absence of other materials for fixing fair rent.
- 1997 (3) LAW WEEKLY 193 (Srinivasa Gounder v. K.Venkatesan): Justice S.S. Subramani held that guideline values could not be used for determining market value; instead, actual sale transactions should be considered.

Supreme Court Precedents:
Several Supreme Court judgments were cited to support the argument that guideline values are intended for stamp duty purposes and do not reflect true market value. These judgments emphasized that market value should be based on bona fide transactions between willing buyers and sellers.

Conclusion by Full Bench:
The Full Bench concluded that:
1. Guideline values have no statutory base or force for determining market value.
2. Market value should be based on bona fide sales between willing vendors and vendees of similar properties.
3. The Rent Controller and the Rent Control Appellate Authority erred in relying on guideline values.

Remand Order:
The Full Bench set aside the orders of the Rent Controller and the Rent Control Appellate Authority and remanded the matter for fresh consideration. The Rent Controller was directed to determine the fair rent based on evidence of bona fide sales of similar properties. The interim order requiring the tenant to pay Rs. 1,500/- per month as rent would continue until final adjudication.

Directive for Expeditious Disposal:
Given the long pendency of the case (since 1993), the Rent Controller was directed to dispose of the matter within two months.

Final Disposition:
The Civil Revision Petition was disposed of, with no costs awarded.