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TMI Blog1961 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... first two categories of cases. The appeals in the first two categories have been brought to this Court on a certificate granted by High Court, and have been consolidated by an order made by the said Court. Civil Appeal No. 171 of 1958 has been brought to this Court in pursuance of special leave granted by this Court on November 19, 1956. 2. The reason why these appeals have been put in three categories is this. The judgment of the High Court against which these appeals are really directed is the judgment rendered in the first two categories of cases (reported in Messrs. British Medical Stores v. L. Bhagirath Mal I.L.R(1955) . 8 Pun 639. That judgment related to four sets of buildings of Chandni Chowk in Delhi. In Civil Appeals Nos. 172 to 186, we are concerned with two of these buildings owned by the landlord Bhagirath Mal, who has since died and is now represented by some of the respondents. For convenience, however, we shall refer to him as the landlord. The two buildings we are concerned with are called (1) Chemists' Market , also known as Medicine Market , and (2) Prem Building . Both these buildings are part of a colony called Bhagirath Colony . Several tenants too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in Delhi after partition, they were forced to take on rent the shops in question on an excessive and exorbitant rate of rent charged by the landlord. They alleged that the premises were completed after March 24, 1947, and they were entitled to have the fair and standard rent determined for the shops in question by the rent Controller. On August 12, 1948, the Rent Controller recorded an order to the effect that in order to fix the rent of the shops in question in accordance with s. 7A read with Sch. IV of the Control Act, 1947 a summary enquiry would be held on August 18, 1948. A notice was issued to that effect to the landlord, directing him to attend and bring all relevant authenticated records such as plans, account books, vouchers etc., showing the cost of construction of the building; the landlord was also asked to bring documentary evidence relating to the date of completion of construction of the building. It is necessary explain here why the date of completion of construction of the building was important. The Control Act, 1947 came into force on March 24, 1947. By s. 1(2) thereof, as it originally stood, it was not applicable to any premises the construction of which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir occupation. It is clear, however, from the application of the landlord dated September 1, 1948 that 14 tenants including some of those who had applied on July 30, 1948 had applied for fixation of standard rent for the shops occupied by them. On November 9, 1948, the Rent Controller wrote a letter to the landlord in which he referred to some enquiry held in his office on September 1, 1949 and said : On that day you promised to produce some papers to show that these shops were completed before March 24, 1947. As the case is unnecessarily being delayed, you are requested to appear in my office with all the necessary documents at 3 P.M. on Wednesday the 17th November, 1948. It may please be noted that no further adjournment will be possible. Your failing to comply with this notice, ex-parte decision will be given . 6. On November 15, 1948 the Rent Controller again wrote to the landlord that on a representation made by the landlord's representative, the date had been extended to November 19, 1948 and the landlord should produce all necessary documents relating to the building in question. The Rent Controller again reminded the landlord that there would be a final hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1948. My instructions, however, have not been complied with so far and it is presumed that you are trying to evade the issue. I, however, give you another final opportunity and direct you to submit your written statement on oath within one week from the receipt hereof, showing the date of completion of construction of your building known as Chemists' Market in Bhagirath Colony, Chandni Chowk, Delhi. Please take notice that your failure to comply with (torn) within the stipulated period will amount to disobeying the orders of this Court and the case will be referred to appropriate authorities for necessary action in the matter. 9. The landlord took no steps whatsoever to furnish any written statement. In these circumstances, the Rent Controller passed his final order on January 10, 1949. In that order he recited the facts stated above and ended up by saying that though the landlord had been given sufficient opportunity, he had not made any statement in writing or otherwise and that the landlord was clearly trying to avoid the trial of the issue. The Rent Controller had inspected the building on December 12, 1948 and made local enquiries. He came to the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax and charges for consumption of water and electricity. A calculation sheet was prepared fixing the standard rent for each of the shops including some shops which were vacant, on the aforesaid basis. The calculation sheet showed that the standard rent of 18 shops in the building varied from ₹ 10 per month to ₹ 50 per month. 11. Against the order of the Rent Controller dated January 10, 1949, nineteen appeals were taken to the District Judge. One of the points taken before the District Judge was that the Rent Controller had no jurisdiction to fix the standard rent inasmuch as the building had been completed before March 24, 1947. The learned District Judge dealt with this point at length, and held that the Rent Controller's finding on the question of jurisdiction was correct. As to fair rent, he held that though the building was single-storeyed, there was no reason why the landlord should not be allowed the full value of the land on which the building stood. Allowing full value for the land and having regard to the rent of premises in the neighbouring area, the learned District Judge modified the order of the Rent Controller and fixed the standard rent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of natural justice inasmuch as all recognised principles governing tribunals which exercise quasi-judicial powers or follow a procedure subserving the orderly administration of justice had been disregarded. On this point the learned Judge, delivering the judgment of the Court, expressed himself as follows : In the present case no evidence as to rent was called from the parties or recorded by the Controller nor was any opportunity afforded to the parties to adduce such or any evidence which they considered necessary to submit. The Controller made private enquiries and his order shows that he has based his decision on the cost of the building which he himself calculated without allowing the petitioner an opportunity to show that such calculation was wrong or its basis erroneous. Of course, there is no procedure prescribed by the Schedule and whatever procedure was followed does not subserve the orderly administration of justice. So that the determination is based on private enquiries, unchecked calculations and no evidence of the parties who were afforded no opportunity of proving their respective cases. 13. With regard to the flats in 'Prem Building' a furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nwards when the second world war broke out. The High Court pointed out that the New Delhi House Rent Control Order, 1939 made under r. 81 of the Defence of India Rules was the first Control Order seeking to control rent of houses in New Delhi and the Civil Lines. From 1939 till 1942 no Rent Control Act applied to the municipal area of Delhi. On October 15, 1942 the Punjab Urban Rent Restriction Act, 1941 with suitable adaptations was extended to that area. Under that Act a landlord could recover only standard rent from the tenant and the term 'standard rent' was defined as meaning the rent at which the premises were let on January 1, 1939 and if not so, the rent at which they were last let. In cases not governed entirely by this definition, the Court was given the power to fix standard rent. In 1944 the then Governor-General promulgated the Delhi Rent Control Ordinance, 1944. Under this Ordinance the Chief Commissioner could apply it to any area within the Province of Delhi and whenever the Ordinance was made applicable to any area, the Punjab Urban Rent Restriction Act, 1941 ceased to be operative. In the Ordinance also standard rent was defined substantially in the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. Section 7 says that the standard rent shall be determined in accordance with the principles set forth in the Second Schedule. The Second Schedule fixes basic rent as determined under the Control Order of 1939 or under the 1944 Ordinance and in other cases the contractual rent on 1-11-1939 or if not on that day then on the date first let after 1-11-1939. 18. The standard rent thus fixed is to be increased by certain percentage specified in the Schedule. If the premises were let after 2-6-1944 then the basic rent and the standard rent were to be the same. Obviously this principle for fixation of standard rent could not possibly have any application to premises constructed and let after 24-3-1947. Section 7 then proceeds to lay down that if for any reason it is not possible to determine the standard rent of any premises set forth in the Second Schedule then the courts shall determine it having regard to the standard rent of similar premises in the same locality and other relevant considerations . Para 4 of Schedule IV lays down : 19. 'In fixing the standard rent the Rent Controller shall take into consideration all the circumstances of the case including any amount pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould object to this provision. 24. The reason for this provision is intelligible. It is well known that rents in Delhi prior to 1-11-1939 were very low and in some cases uneconomic. Therefore the legislature decided that in such cases a landlord should be in a position to get standard rent fixed at a rate higher than fixed by agreement of the parties in 1939 or earlier. No such consideration arises in the case of buildings constructed or completed after 1947. 25. In 1947 there existed an acute shortage of accommodation in Delhi and the landlords were in a position to dictate terms and, therefore, presumably the rents fixed between the parties were not so low as to require increase. It is for this reason that it was considered unnecessary to provide for increase of rent in Schedule IV. I am, therefore, of the opinion that it is not possible on these grounds to hold that s. 7-A and Schedule IV are unconstitutional. 26. The learned counsel then brought to our notice two other matters in which the newly constructed buildings have been treated differently from the old buildings. He pointed out that under para 10(2) of Schedule IV the standard rent fixed by Rent Controller must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry as he considers fit to fix the standard rent. x x x x x 31. In fixing standard rent the Rent Controller decides a dispute between a landlord and a tenant. To do this effectively he has to take evidence and to hold a judicial inquiry particularly when he has to give reasons for his decision. Para 7 is also indicative of such a judicial inquiry. There is no reason for presuming and assuming that the Rent Controller would not hold such an inquiry. If he does not do so then the aggrieved party can always appeal to the District Judge, Delhi who invariably is a very senior and experienced judicial officer. x x x x x 32. In this context it must not be forgotten that considering the recent rise in prices of land, building material and labour costs in Delhi the standard rent should be correlated to these costs. In the circumstances the legislature in its wisdom has thought fit that the enquiry into standard rent of new building should continue to remain with the Rent Controllers who can expeditiously decide the matter. 33. In this context it can be reasonably expected that the Central Government will appoint only those persons as Rent Controllers who can use their ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This brings us to the main question for decision in these appeals - was there a violation of the principles of natural justice in the procedure which the Rent Controller actually followed in fixing the standard rent ? We are unable to agree with the High Court that there was any such violation. On behalf of the landlord, it has been contended before us that in respect of both the matters, completion of construction of the building and fixation of standard rent, the Rent Controller proceeded on (i) private enquiries, (ii) local inspection without notice, and (iii) inadmissible evidence. Before we deal with this argument, it is necessary to say a few words about the principles of natural justice. This Court considered the question in New Prakash Transport Co., Ltd. v. New Suwarna Transport Co., Ltd. [1957]1SCR98 . After a review of the case law on the subject, it pointed out that the rules of natural justice have to be inferred from the nature of the tribunal, the scope of its enquiry and the statutory rules of procedure laid down by the law for carrying out the objectives of the statute. The mere circumstance that the procedure prescribed by the statute does not require that evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he landlord was again given one week's time to file his written statement and produce such other evidence as he wished to produce. In these circumstances it is difficult to understand how the landlord can complain that there has been a violation of the principles of natural justice and that he had no opportunity of producing evidence or of cross-examining the witnesses whose statements were recorded by the Rent Controller. It is indeed true that the Rent Controller made some local enquiries when he inspected the building on December 12, 1948. If, however, the landlord chose to be absent in spite of repeated intimation to him, he cannot be heard to say that the enquiries were made in his absence and are, therefore, bad. To hold in such circumstances that there has been a violation of the principles of natural justice would be to put a premium on the recalcitrance of a party. Even in the ordinary courts of law, if a party chooses to be absent in spite of notice, evidence is recorded ex-parte and the party who chooses to be absent cannot be heard to say that he had no opportunity of being present or of cross-examining the persons whose statements were recorded by the court. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the inspection was made without notice to the landlord. This, it is stated, has vitiated the entire proceedings. This argument might have had some force, but for the attitude adopted throughout the proceedings by the landlord. On the very date on which the Rent Controller intimated to the landlord that he would visit the building on December 5, 1948, the landlord sent a telegram purporting to be on his behalf stating that he was out of station. The Rent Controller then noted an order on that very date stating that the advocate for the landlord gave an application for staying the proceedings. The application was rightly refused by the Rent Controller. In these circumstances we do not think that the landlord can make any complaint that the inspection was without notice or that he had no opportunity of being present at the time of the inspection. It is obvious that from the very beginning the landlord had taken up an attitude of non-co-operation in the proceedings before the Rent Controller. It is worthy of note that even in statement of the case in this Court, the landlord has made no grievance that the inspection was held without notice to him; nor did he take any such plea be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged by the landlord. It was, we think, open to the Rent Controller to accept those reasons as prima facie good reasons for proceeding to make an enquiry to fix the standard rent in that enquiry it was open to the Rent Controller to give the necessary finding that the rent charged by the landlord was excessive. The final order of the Rent Controller shows without doubt that he was satisfied that the rent charged by the landlord was exorbitant and excessive. We are unable to hold that in these circumstances there has been any contravention of para 2 of Sch. IV of the Control Act, 1947. 39. Another objection taken by the landlord to the proceedings before the Rent Controller arises out of the circumstance that the Rent Controller in fixing the standard rent for the entire building had fixed the rent even for vacant shops i.e. shops which were not in occupation of any tenant at the time. In the final order which the Rent Controller passed, he fixed the standard rent for all the shops at ₹ 335/- per month and in the calculation sheet, which was part of the final order made by the Rent Controller on January 11, 1949, three shops have been shown to be vacant. It has been con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for fixation of standard rent on July 30, 1948, but it appears that there were other applications also from other tenants. This is clear from the office note, to which we have already referred earlier, appended to the application of 9 tenants. Moreover the application which the landlord himself had made on September 1, 1948 showed that 14 tenants had made applications for the fixation of standard rent of their shops in Chemists' Market in Bhagirath Colony. Unfortunately, all the applications have not been printed in the paper book. The order of the Rent Controller shows that he treated all the applications as though they gave rise to a single proceeding, because they related to the same building. This point which has now been taken before us does not appear to have been taken before the District Judge who said that there were 19 appeals before him arising out of a single order of the Rent Controller fixing rent for 18 different shops of a building belonging to the landlord. In the calculation sheets which the Rent Controller and the learned District Judge had prepared and which give the names of all the tenants the standard rent for whose shops was fixed, are shown the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the landlord was that the second-floor on which the two flats of the tenants were situated was completed before March 24, 1947, and therefore, no proceeding in respect thereof was maintainable under s. 7A of the Act. The Rent Controller went into the evidence adduced before him very carefully and came to the conclusion that though the ground-floor and the first-floor of the building were old, the second-floor was constructed sometime in August, 1947. He, therefore, held that the second-floor was a new construction within the meaning of s. 7A of the Control Act, 1947 and he fixed the standard rent for each flat at ₹ 96-8-0. The matter was then taken in appeal to the District Judge. Again the main contention before the District Judge was that the Rent Controller had no jurisdiction as the premises in question were not newly constructed. The District Judge dealt with this point in the following way : The premises are two flats on the second floor of a large building belonging to the appellant, and the rent Controller has found that these flats were constructed after 24th March, 1947. The record shows that the general attorney for the appellant admitted before the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al relates to two flats on the ground floor of plot No. 20, Block No. 13, Western Extension Area, Karolbagh. The tenant, who is the appellant before us, took the flats on a rent of ₹ 220 per month including tax on December 15, 1950. On May 15, 1951 he made an application for fixation of standard rent under s. 7A of the Control Act, 1947, on the ground that the rent charged was excessive and exorbitant. The application was contested by the landlord. On December 7, 1951, the Rent Controller fixed ₹ 150 per month as the standard rent inclusive of tax. The landlord filed an appeal to the District Judge which was dismissed on May 12, 1953. The landlord then filed an application in revision to the High Court and the High Court accepted the application on May 10, 1954, and remanded the case for a fresh trial. When the case came back to the Rent Controller, the landlord made an application to the Rent Controller to the effect that s. 7A read with Scheduled IV of the Control Act, 1947, was rendered unconstitutional and void on the coming into force of the Constitution of India. Apparently, this point was taken in view of the judgment of the Punjab High Court dated August 26, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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