M.L. YACOB SHERIFF (D) BY LRS.versusRAJRANI DEVI

                M.L. YACOB SHERIFF (D) BY LRS.                          A
                             v.
                        RAJRANI DEVI

                         OCTOBER 17, 2003

     [SHIVARAJ V. PATIL AND D.M. DHARMADHIKARI, JJ.]                    B

      Tamil Nadu Buildings (Lease & Rent Control) Act, 1960-Sections
 2(2) and 4(4)-Fixation of fair rent-Inclusion of land over which
 construction raised by tenant-Courts below did not include such land/or
fixation of/air rent or within built up land-Held, the word "building" in C
Section 4(4) to be given same meaning "as the building let or to be let"
in accordance with definition clause in Section 2(2)-Building .let out
cannot be differently understood to include the building constructed by
the tenant on the leased land-Land on which construction raised by the
 tenant be valued only as vacant land or appurtenant land or amenity D
 to the building and land let out by the landlord-Legislature did
 not contemplate valuation of building constructed by tenant for purpose
 offixation of f..iir rent.

      The appellant-landlord wanted to include the portion of land, on
which the tenant had raised construction seeking his permission, for E
fixation of fair rent under Section 4(4) of the Tamil Nadu Buildings
(Lease & Rent Control) Act, 1960. The courts below concurrently held
against the appellant-landlord and did not include the land on which
construction was raised by the tenant for fixation of fair rent or within
the built up land. Hence this appeal.                                     F
      The appellant-landlord contended that as per Section 4(4) of the
Act "market value of the site on which the building is constructed"
include both the lands on which the building let out stands as well as
the buildings raised by the tenant; and thl't even though the building G
constructed by the tenant may be excluded for valuation with the
building let out, but the land on which construction has been raised
has to be treated as a built up area for purposes of valuation of that
land.

     Dismissing the appeal, the Court                                   H
                                  1015
    1016               SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A        HELD 1. It is abundantly clear that the word 'building' as
    mentioned in Section 4 of the Tamil Nadu Buildings (Lease & Rent
    Control) Act, 1960 is to be given the same meaning as cont.ained in the
    definition clause in Section 2(2) of the Act. The word 'building',
    therefore, wherever used in Section 4(4) including the provisos has to
B   be given the same meaning "as the building let or to be let." The word
    'building' used in Section 4(4) with the provisos therein cannot be
    differently understood to include with building let out, the building
    constructed by the tenant on the leased land. The legislature did not
    contemplate for the purpose of fixation of fair rent, valuation of
C   building constructed by the tenant. (1020-H; 1021-A-B]

          2. Wherever the word 'building' has been used, it has to be
    understood in accordance with the definition clause contained in Section
    2(2) to mean only vacant land on which the 'building let or to be let'
    stands. For the purpose of valuation of the building and land let out, the
D   construction put by the tenant on any portion of the vacant land leased
    cannot be taken into account. Similarly the land built up by the tenant
    can not be valued as built up portion of the leased land. [1021-D-E]

           C.S. Rajavelan v. A.N Parasurama Iyer, Vol. 83 Liiw Weekly Page
E 524 and Sherwood Educational Society v. Hussainy Begum Namzie,
    (1985) 1 MLJ 205, atlirmed.

         HS. Lodha v. C. Ranganathan, AIR (1989) Madras 225, ~istin­
    guished.

F      . 3. Courts below were right in holding that in fixation of fair rent,
    neither the value of the building raised by the tenant on the leased
    vacant land nor the vacant land, as a built up area can be taken into
    consideration. Such land on which tenant has built upon with the
    permission of the landlord has to be treated for the purpose of
G   valuation of the leased premises, as vacarit land. Such land built upon
    by the tenant has to be valued only as a 'vacant land; or 'appurtenant
    land' or 'amenity', as the case may be, to the building and land
    included in the premises of the landlord. [1021-H; 1022-A-B]

           CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 5593-
H 5594 of 2002.
     ML YACOB SHERIFF v. RAJRANI DEVI [DHARMADHIKARI, J.] 1017

    From the Judgment and Order dated 14.9.2001 of the Madras High A
Comt in C.R.P. Nos. 895/99 and 535 of 2000.

     A.A. Lawrance, Rajeev Sharma and M.C. Dhingra for the Appellant.

      S. Balakrishnan, Subramonium Prasad, S.N. Jha and R. Gopalakrishnan    B
for the Respondent.

     The Judgment of the Court was delivered by

     DHARMADHIKARI, J.: There appeals are by the landlord and the
question raised in on the method of valuation of the premises leased to the C
respondent tenant, in accordance with Section 4(4) of the Tamil Nadu
Buildings (Lease & Rent Control) Act, 1960 (hereinafter referred to as the
"the Act" for short) for fixation of 'fair rent'.

      Tne question, neatly put is whether in valuation of land with the D
superstructure oflandlord let out, the portion of the land which has been
built upon by the tenant with the permission of the landlord, has to be
valued as a built up land or as vacant land under Section 4(4) of the Act
for fixation of 'fair rent?' The Rent Controller, the Appellate Court and
the High Court of Madras by the impugned order dated 14.9.2001 have E
concurrently held against the landlord that in valuation of the leased
premises, for fixation of fair rent, the portion of the land on which the
tenant had been allowed to construct by the landlord cannot be valued as
a built up land.

      The learned counsel appearing for the landlord after taking us through F
the provisions of the Act and the decision of the Madras High Court
including one of the full Bench, contended that the words used in section
4(4) "market value of the site on which the building is constructed" include
both the lands on which the building leased out of the landlord stands as
also the building raised by the tenant.                                      G
      After hearing learned counsel appearing for the pa1ties we have come
to the conclusion that the contention advanced on behalf of the landlord
has to be answered against him on the plain language of Section 4(4) of
the Act read with the definition of the word 'building' given in section 2(2) H
     1018                 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A of the Act.
           Section 4 which provides the method of valuation of 'fixation of fair
     rent' reads as under :

             Section 4(4) : Fixation of fair rent :
B
              (l)   The Controller shall on application made by the tenant or
                    the landlord of a building and after holding such enquiry as
                    he thinks fit, fix the fair rent for such building in accordance
                    with the principle as set out in the following sub-sections.
c
              (2)   The fair rent for any residential building shall be nine per
                    cent gross return per annum on the total cost of such
                    building.

              (3)   The fair rent for any non-residential building shall be twelve
D                   per cent gross return per annum on the total cost of sucp
                    building.

              (4)   The total cost referred to in sub-section (2) and sub-section
                    (3) shall consist of the market value of the site in which the
E                   building is constructed, the cost of construction of the
                    building and the cost of provisions of anyone or more of the
                    amenities specified in Schedule-I as on the date of application
                    for fixation of fair rent :


F                  Provided that while calculating the market value of the site
              in which the building is constructed, the Controller shall take into
              account only that portion of the ~it~ on which the building is
              constructed and of a portion upto fifty per cent, thereof of the
              vacant land, if any, appurtenant to such building the excess
              portion of the vacant land, being treated as amenity :
G
              Provided fmther that the cost of provision of amenities specified
              in Schedule I shall not exceed-

              (I)   in the case of any residential building, fifteen per cent;
fl                  and
           ML YACOB SHERIFF v. RAJRANI DEVI [DHARMADHIKARI, J.] l 019

               (II)   in the case of any non-residential building, twenty five per A
                      cent,

               of the cost of site in which the building is constructed, and the
               cost of construction of the building as determined under this
               section."
                                                                                      B
            As seen from Section 4(4) above, in valuation of the property leased
      for fixation of fair rent three factors are to be considered (l) market-value
      of the site ia which the building is constructed (2) the cost of construction
      of the building (3) cost of provision of any one or more of the amenities
      specified in Schedule-I.                                                        c
            The first proviso to the sub-section then provides that in calculating
      market-value of the site in which the building is constructed, the actual
      built up area covered by construction and the appurtenant vacant land
      maximum to the extent of 50% has to be included. The excess portion of D
      the vacant land beyond 50% of the appurtenant land to the building is
      fictionally treated as amenity iisted under Entry 15 of Schedule-I. The
      relevant part of Schedule-I reads:

               "15-Amenities
               I.     Air-conditioner.                                                E
               2.     Lift.
               3.     Water-cooler.
               4.     Electrical heater.
               5.     Frigidaire.·                                                    F
               6.     Mosaic flooring.
-.,            7.     Side dadoos.

  '            8.     Compound walls.
               9.     Garden.                                                         G
               10.    Over-head tank for water-supply.
               11.    Electric pump a~d motor for water-supply.
               12.    Playground.
               13. Badminton and Tennis courts.                                       H
    1020                   SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A             14.    Sum-breakers.
              15.   Amenity referred to in the first proviso the sub-section (4)
                    of Section 4. "
                                            (underlining for adding emphasis)

B        The second proviso to sub-section (4) provides slab for valuation of
    the amenities in Schedule-I which in the case of residential building shall
    not exceed 15% and non-residential building, 20% of the cost of construc-
    tion of the building.

           According to the learned counsel for the landlord, the expression
C 'building' used in sub-section (4) with first and second proviso thereunder
    should include both the buildings let out by the landlord as well as building
    allowed to be constructed by the tenant.

          The definition of'building' provided in Section 2(2) clearly negatives
D   such contention advanced on behalf of the landlord. Section 2(2) defines
    'building' as under :

              "Section 2(2) - In this Act, unless the context otherwise requires-

              (I)    xxx    xxx    xxx     xxx
E
              (2)     "building" means any building or hut or part of a building
                      or hut, let or to be let separately for residential or non-
                    . residential purposes and includes -

F                    (a)   the garden, grounds and out-houses, if any appurtenant
                           to such building, hut or part of such building or hut and
                           let or to be let along with such building or hut.

                     (b)   Any furniture supplied by the landlord for use in such
                           building or hut or part of a building or hut, but does
G                          not include a room in a hostel or boarding house".

                                                   (underlining to add emphasis)

         From the definition clause in Section 2(2) it is abundantly clear that
H   the word 'building' as mentioned in Section 4 is to be given the same
             .
     ML YACOB SHERIFF v. RAJRANI DEVI [DHARMADHIKARI, J.] 1021

meaning as contained in the definition clause. The word 'building', A
therefore, wherever used in sub-section (4) including in the first and second
proviso has to be given the same meaning "as the building let or to be let."
The word 'building' used in sub-section (4) of Section 4 with two provisos
therein cannot be differently understood to include with building let out,
the building constructed by the tenant on the leased land. From the B
language of sub-section (4) of Section 4, we do not find that the legislature
contemplates for the purpose of fixation of fair rent, valuation of building
constructed by the tenant.

      The learned counsel for the appellants then advanced an alternative
argument that even though the building constructed by the tenant may be C
excluded for valuation with the building let out, but the land on which
tenant has constructed, has to be treated as a built up area for the purpose
of valuation of that land. The alternative :;ubmission made is also not
supported by the clear language employed in sub-section (4) of section 4.
As we have stated above wherever the word 'building' has been used, it D
has to be understood in accordance with the definition clause contained in
Section 2(2) to mean only vacant land on which the 'building let or to be
let' stands. For the purpose of valuation of the building and land let out,
the construction put by the tenant on any portion ofthe vacant land leased,
cannot be taken into account. Similarly the land built upon by the tenant E
can not be valued as built up portion of the leased land.

     The view we are taking is consistent with the views expressed in
various decisions of the High Court of Madras such as in CS Rujavelan
v. AN Parasurama Iyer, Vol. 83 Law Weekly Page 524 and Sherwood
Education Society v. Hussainy Begum Namazie, (1985) I MLJ Page 205. F

      The Full Bench decision of the Madras High Court in H.C. Lodha
v. C. Ranganathan, AIR (1989) Madras page 225 of which some assistance
is sought to be taken by the learned counsel for the tenant is a decision
distinguishable which did not directly deal with the question of valuation G
of the land built upon by the tenant.

      In our considered opinion, therefore, the Rent Controller, the Appel-
late Authority as well as High Court were right in holding that in fixation
of fair rent, neither the value of the building raised by the tenant on the H
                                                             ...   ;




    1022               SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A leased vacant land nor the vacant land, as a built up area can be taken into
    consideration. Such land on which tenant has built upon with the permis-
    sion of the landlord has to be treated for the purpose of valuation of the
    leased premises, as vacant land. Such land bmlt upon by the tenant has to
    be valued only as a 'vacant land' or 'appurtenant land' or 'amenity,' as
B   the case may be, to the building and land included in the leased premises
    of the landlord.

         Consequently, the appeals fail and are hereby dismissed but in the
    circumstances without any order as to costs.

C A.Q.                                                    Appeals dismissed .




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