MOHAMMAD AHMAD & ANR.versusATMA RAM CHAUHAN & ORS.

                         [2011] 6 S.C.R. 822

A                  MOHAMMAD AHMAD & ANR.
                                   v.
                  ATMA RAM CHAUHAN & ORS.
                  (Civil Appeal No. 4422 of 2011)
                            MAY 13, 2011
B
      [DALVEER BHANDARI AND DEEPAK VERMA, JJ.]

        Rent Control and Eviction:
c         Interim order - Writ petition before High Court arising out
   of order of eviction of tenants - Orders by Single Judge
   enhancing the monthly rent while granting stay of
   dispossession of tenants, as an interim measure - HELD:
   Enhancement in rent will not ipso facto be deemed to be
D unreasonable and exorbitant unless the tenant is able to give
   cogent reasons for the same - In the instant case, in the
   absence of any valuation report, the assessment and the
  judgment of the Single Judge, after taking into account the
  yardsticks and the contentions of bot/. fhe parties appears to
E be absolutely correct - In order to minimize landlord-tenant
   litigation, guidelines and norms enumerated - Constitution of
   India, 1950 - Articles 226, 132 and 142 - Interim order.
       Two shops each admeasuring 12'x1 O', both
F equivalent to 240 sq. ft. belonging to landlords-
  respondents nos. 1 to 3 and under tenancy of the
  appellants, were released by the appellate authority in the
  appeal arising out of the application u/s 21(1)(a) of the
  U.P. Urban Buildings (Regulation of Letting, Rent and
G Eviction) Act, 1972. The shops were fetching a monthly
  rent of Rs.40/- and Rs.20/- (a total of Rs.60/-). In the writ
  petition filed by the tenants, the Single Judge of the High
  Court, by order dated 14.9.2005, granted stay of their
  dispossession enhancing the monthly rent to Rs.600/-.
H                                 822
       MOHAMMAD AHMAD & ANR. v. ATMA RAM                  823
               CHAUHAN & ORS.
 Since the writ petition remained pending, the Single            A
 Judge after hearing both the parties, by order dated
 13.2.2007, enhanced the rent of both the shops to
 Rs.2100/- per month, as an interim measure.

       On the strength of some unreported decisions, it was      B
  contended for the tenants-appellants that the practice of
  enhancement of rent during the pendency of writ
  petitions under Articles 226/227 and that too without any
  valuation report, was deprecated by the Supreme Court.
1 It was further contended that the monthly rent having          c
  been enhanced to Rs.600/- only on 14.9.2005, no case
  was made out for further enhancement to Rs.2100/- by
  order dated 13.2.2007 within a period of two years.
       Dismissing the appeal, the Court
                                                                 D
     HELD: 1. In the case in hand it is clearly reflected that
 respondents-landlords made an offer to the appellants/
 tenants which they agreed, and only thereafter the rent
 was enhanced from Rs. 600/- per month to Rs. 2100/- per
 month, for both the shops. Thus, the ratio of the               E
 judgments cited on behalf of the appellants has no
 application to the facts of the case. [para 15] [830-E-F]
                               '
      2.1. The rent as has been fixed by the Single Judge
 for the two shops, having total area of 240 sq. ft., to Rs.     F
 2100/- per month is not only reasonable but would be just
 and proper. Any enhancement in rent will not ipso facto
 be deemed to be unreasonable and exorbitant, unless
 the party aggrieved is able to give cogent reasons for the
 same. [para 17] [831-D-E]                                       G
      Atma Ram Properties (P) Ltd. Vs. Federal Motors Pvt.
 Ltd. 2004 (6) Suppl. SCR 843      =
                                  (2005)1 SCC 705 - relied
 on.
                                                                 H
    824       SUPREME COURT REPORTS             [2011) 6 S.C.R.


A      2.2. No doubt, it is true that the Single Judge has
  applied his own yardstick in working out the rent but only
  after both parties' contentions were taken into account
  and the said yardstick appears to be absolutely correct
  and perfect method of working out the current market
B rental of the premises. Even though no valuation report
  was taken into consideration, as there was none, but the
  assessment and judgment of the Single Judge cannot be
  disallowed, even if detailed reasons have not been
  assigned by the Single Judge for enhancing the rent
C because the ultimate conclusion arrived at by him does
  not suffer from any infirmity, illegality or perversity. [para
  18-19] [832-E-H]
          3.ln the considered view of the Court, majority of
o these cases are filed because landlords do not get
    reasonable rent akin to market rent, then on one ground
    or the other litigation is initiated. In order to minimise
    landlord-tenant litigation, the following guidelines and
    norms are laid down:
E
          (i) The tenant must enhance the rent according to the
          terms of the agreement or at least by ten percent,
          after every three years and enhanced rent should
          then be made payable to the landlord. If the rent is
          too low (in comparison to market rent), having been
F
          fixed almost 20 to 25 years back, then the current
          market rate should be worked out either on the basis
          of valuation report or reliable estimates of building
          rentals in the surrounding areas, let out on rent
G         recently.
          (ii) Apart from the rental, property tax, water tax,
          maintenance charges, electricity charges for the
          actual consumption of the tenanted premises and for
          common area shall be payable by the tenant only so
H
MOHAMMAD AHMAD & ANR. v. ATMA RAM                       825
        CHAUHAN & ORS.
that the landlord gets the actual r~nt out of which            A
nothing would be deductible. ln case there is
enhancement in property tax, water tax or
maintenance charges, electricity charges then the
same shall also be borne by the tenant only.
                                                               B
(iii) The usual maintenance of the premises, except
major repairs would be carried out by the tenant only
and the same would not be reimbursable by the
landlord.

(iv) But if any major repairs are required to be carried       C
out then in that case only after obtaining permission
from the landlord in writing, the same shall be carried
out and modalities with regard to adjustment of the
amount spent thereon, would have to be worked out              D
between the parties.

(v) If prevalent market rent assessed and fixed
between the parties is paid by the tenant then
landlord shall not be entitled to bring any action for
eviction against such a tenant at least for a period of        E·
5 years. Thus, for a period of 5 years the tenant shall
enjoy immunity from being evicted from the premises.
(vi) The parties shall be at liberty to get the rental fixed
by the official valuer or by any other agency, having          F
expertise in the matter.

(vii) The rent so fixed should be just, proper and
adequate, keeping in mind, location, type of
construction, accessibility with the main road,                G
parking space facilities available therein etc. Care
ought to be taken that it does not end up being a
bonanza for the landlord. [para 21] [833-B-H; 834-A·
D]
                                                               H
    826      SUPREME COURT REPORTS                   [2011] 6 S.C.R.

A                         Case Law Reference:
          2004 (6) Suppl. SCR 843        relied on        para 17
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    4422 of 2011.
B
        From the Judgment & Order dated 13.7.2007 of the High
    Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
    39727 of 2004.

          Dinesh Kumar Garg for the Appellants.
c
          Rachna Gupta, R.C. Kaushik for the Respondents.
          The Judgment of the Court was delivered by
          DEEPAK VERMA, J. 1. Leave granted.
D
       2. One half of the /is between landlord and tenant would
  not reach courts, if tenant agrees to pay the present prevalent
  market rate of rent of the tenanted premises to the landlord. In
  that case landlord would also be satisfied that he is getting
E adequate, just and proper return on the property. But the trend
  in the litigation between landlord and tenant shows otherwise.
  Tenant is happy in paying the meagre amount of rent fixed years
  ago and landlord continues to find out various grounds under
  the Rent Acts, to evict him some how or the other. This case
F appears to be another classic example of the aforesaid
  scenario.
        3. Thumb nail sketch of the facts of the case are mentioned
    hereinbelow:-
G      Appellants herein are the tenants of two shops
  admeasuring 10x12 feet each, equivalent to 240 sq. ft., situated
  at National Highway Chakrata Saharanpur (U.P.). The map
  attached alongwith counter affidavit of the Respondent Nos. 1
H to 3 (which is not disputed by the Appellants) shows that these
     MOHAMMAD AHMAD & ANR. v. ATMA RAM                        827
      CHAUHAN & ORS. [DEEPAK VERMA, J.)
shops are part of the building known as Jaitpur Sadan, now           A
coming under commercial area. As per the sketch on record,
it is bounded by 11 O ft. wide National Highway to the east, a
90 ft. wide Town Hall Road to the west, a 20 ft. by lane to the
south, and nothing is shown and no construction appears to be
there in the north. In all, Jaitpur Sadan has .five shops of the     B
same size facing east and four shops of the same size and one
adjoining mini-store (which is probably another smaller shop)
and staircase for reaching first floor, facing west.

   · 4. Earlier when the abovementioned Jaitpur Sadan was            c
constructed, it appears that the same was about20 Kms. away
from the city of Saharanpur. Now with the passage of time, the
outer limits of the city have grown and have come to include
the said building. Thus, it can be called a commercial area.
                                                                     D
      5. Respondent No. 1 who w~ working as the Medical
Officer at Zila Parishad, Saharanpur retired on 31.07.1992. For
his personal bonafide need he needed these two small shops,
i.e. an east-facing room (for consultation and setting up medical
equipment) and an adjoining west-facing room (to serve as a          E
waiting room for patients). The sketch map shows that one of
the shops facing western side is already in his occupation. He
had requested both Appellant No.1 and Respondent No.4, Shri
Md. Ahmad Iqbal, respectively, for release of any one pair of
shops[ but neither of the two acceded to his request.          ·     F
     6. Thus, he filed an application under Section 21(1)(a) of
the U.P. Act No. 13of1972 (hereinafter shall be referred to as
the 'Act') against the Appellants/Tenants as well as the
Respondent No.4 praying for release of any one pair of the said
two pairs of shops in his favour. At that time the Appellants were   G
paying rent at Rs. 40 and Rs. 20/- (total Rs. 60/- per month) for
the pair of shops in their possession.
    7. The matter was contested by the Appellants before the
Prescribed Authority/IV Additional Civil Judge, Saharanpur,          H
    828     SUPREME COURT REPORTS                 [2011) 6 S.C.R.


A whereby and whereunder the said authority allowed the
  application of Respondents Nos.1 to 3 - landlords and on a
  comparative assessment of facts and circumstances, released
  the property (shown as Item A in the Map annexed) in which
  Respondent No.4 was a tenant, in their favour.
B
       8. Feeling aggrieved thereof Rent Control Appeals were
  preferred by both the parties, i.e., Respondent Nos.1 to 3 -
  landlords and Respondent No.4 before Additional District
  Judge, Saharanpur. Vide judgment and order dated
c 24.08.2004, the Appellate Court upheld the decree of the IV
  Additional Civil Judge, Saharanpur but modified it, to the extent
  that the pair of shops in tenancy of present Appellants be
  released (shown as Item B in the Map annexed), instead of the
  pair of shops in the possession of Respondent No.4 as
D decreed by the Trial Court, and furthermore, they were directed
  to deliver peaceful and vacant po;:;session thereof to the
  Respondent Nos. 1 to 3, within one month from the date of the
  said order. Thus, the order of release passed by Prescribed
  Authority came to be partially modified by the Appellate
E Authority in as much as the order of release for two shops in
  their favour was maintained.

       9. Thus, unsatisfied and feeling aggrieved thereof the
  Appellants preferred Civil Miscellaneous Writ Petition No.
F 39727 of 2004 before learned Single Judge of the High Court
  of Judicature at Allahabad. It appears while considering the
  application for stay, the learned Single Judge directed that the
  Appellants will not be dispossessed from the shops in dispute
  provided, w.e.f. September, 2005 onwards they pay the
G Respondent Nos. 1 to 3, rent at the rate of Rs. 600/- per month
  by 7th of each succeeding month. In case of two defaults, the
  stay order would stand vacated automatically. Non-payment of
  rent may also be a ground for dismissal of the writ petition. The
  said order was passed by learned Single Judge in the
H
      MOHAMMAD AHMAD & ANR. v. ATMA RAM                        829
       CHAUHAN & ORS. [DEEPAK VERMA, J.]
 Appellants' Writ Petition on 14.09.2005.                              A
        10. It appears that the said writ petition continued to be
  pending before learned Single Judge. The same matter again
  came up for hearing before another learned Single Judge on
  13.02.2007. On the said date learned counsel for Respondent          B
  Nos. 1 to 3 submitted that the rent of the shops is too meagre
  looking to the present rent available for other similarly situated
  shops.so a prayer was made that it be increased reasonably
  according to market rate. On this offer being made, learned
  counsel appearing for the Appellants submitted that the case         c
  for enhancement of rent may be considered by the court
  according to the condition, location and situation etc. of the
  tenanted shops. It was further submitted by the learned counsel
.for the Appellants that in case Appellants are evicted from the
· disputed shops then they would suffer irreparable loss and           o
  injury. Lastly, it was contended by them that even though many
  accommodations are available nearby but none would be
  available at the rent, which is being paid presently by
  Appellants to landlords.
                                                                       E
     11. In the light of aforesaid offer having been made by the
Respondents and duly considered by the Appellants, the
learned Single Judge thought it fit to enhance the rate of rent
from Rs. 600/- per month for both the shops to Rs. 2100/- per
month, payable from February 2007.                                     F
     12. Even though, the Appellants' writ petition was kept
pending and directed to be listed in the month of July, 2007
for reporting compliance of the aforesaid directions, the
Appellants feeling aggrieved thereof have preferred this appeal
on variety of grounds.                                                 G

      13. We have accordingly heard Mr. Dinesh Kumar Garg
for the Appellants and Mrs. Rachna Gupta and Mr. R.C. Kaushik
for the Respondents and perused the record.
                                                                       H
    830     SUPREME COURT REPORTS                 (2011] 6 S.C.R.

A      14. The first thrust of the arguments of learned counsel for
  Appellant was that the rent having been enhanced to Rs. 600/
  - per month only on 14.09.2005, no case was made out for
  further enhancement from Rs. 600/- to Rs. 2100/- per month
  vide the impugned order dated 13.02.2007, within two years
B thereof. It was then submitted that this Court has deprecated
  severely the practice of enhancement of rent in petitions filed
  under Articles 226/227 of the Constitution of India, during the
  pendency of those petitions on merits in the High Court, that
  too without any valuation report. To advance contention in this
C regard, several unreported orders of this Court have been
  placed before us. They are judgment and order dated
  19.01.2009 passed in Civil Appeal No. 316 of 2009 titled Md.
  Iqbal Vs. Atma Ram & Ors.; order dated 03.01.2008 passed
  in Civil Appeal No. 14 of 2008 titled Md. Safi (D) Th. his LRs.
D & Ors. Vs. Sri Farhat Ali Khan and order dated 20.10.2008
  passed in Civil Appeal No. 6171 of 2008 titled Sadan Gopa/
  Gautam Vs. Sushi/a Devi & Ors.
         15. Critical scrutiny of the aforesaid judgments/ orders
E would show that in these cases neither there was any offer made
  by the landlord nor any corresponding acceptance by the tenant,
  still the High Courts, in each of these cases, had enhanced the
  rates of rent unilaterally. But in the case in hand it is clearly
  reflected that Respondents-landlords made an offer to the
F Appellants/tenants which they agreed, only thereafter the rent
  was enhanced from Rs. 600/- per month to Rs. 2100/- per
  month, for both the shops. Thus, the ratio of the aforesaid
  judgments cited by learned counsel for Appellants has no
  application to the facts of the present case.
G
          16. On the other hand learned counsel appearing for
    Respondents strenuously contended that building known as
    Jaitpur house, with the passage of time has come within the
    market area of Saharanpur and can therefore be called as
H · falling within the meaning of commercial area. It was also
     MOHAMMAD AHMAD & ANR. v. ATMA RAM                          831
      CHAUHAN & ORS. [DEEPAK VERMA, J.]
contended that looking to various factors such as the nature of         A
construction, its prime location in the city, being situated on the
main highway, and thus having easy accessibility to it and the
availability of all other amenities and facilities etc. even the rent
fixed by learned Single Judge at the rate of Rs. 2100/~ per
month for both the shops is on the lower side and too meagre.           B
According to her, the total area under occupation of the
Appellants would be 240 sq. ft. and with the rent fixed at
Rs.2100/-, the rent would come to Rs.87.50 per sq. ft. This
according to her is too low, keeping in mind the present trend
and the prevalent market rate of rent. She thus submitted that          C
no case for interference is made out and the appeal being
devoid of merit and substance deserves to be dismissed.

      17. Thus, looking to the matter from all angles we are of
the considered opinion that the rent as has been fixed by the           o
learned Single Judge for the two shops having total area 240
sq. ft. to Rs. 2100/- per month is not only reasonable but would
be just and proper. Any enhancement in rent will not ipso facto
be deemed to be unreasonable and exorbitant, unless the party
aggrieved is able to give cogent reasons for the same. In this          E
context, we may profitably refer to the judgment pronounced by
this Court, reported in (2005)1 SCC 705 titled Atma Ram
Properties (P) Ltd. Vs. Federal Motors Pvt. Ltd. The relevant
portion thereof is reproduced hereinbelow:-
                                                                        F
           "In the case at hand, it has to be borne in mind that
     the tenant has been paying Rs. 371.90/- rent ot the
     premises since 1944. The value of real estate and rent
     rates have skyrocketed since that day. The premises are
     situated in the prime commercial locality in the heart of G
     Delhi, the capital city. It was pointed out to the High Court
     that adjoining premises belonging to the same landlord
     admeasuring 2000 sq. ft. have been recently let out on rent
     at the rate of Rs. 3,50,000/- per month. The Rent Control
     Tribunal was right in putting the tenant on terms of payment H
    832       SUPREME COURT REPORTS                  [2011) 6 S.C.R.


A         of Rs. 15,000/- per month charges for use and occupation
          during the pendency of appeal. The tribunal took extra care
          to see that the amount was retained in deposit with it until
          the appeal was decided so that the amount in deposit
          could be disbursed by the appellate Court consistently with
B         the opinion formed by it at the end of the appeal. No fault
          can be found with the approach adopted by the Tribunal.
          The High Court has interfered with the impugned order of
          the Tribunal on a erroneous assumption that any direction
          for payment by the tenant to the landlord of any amount at
c         any rate above the contractual rate of rent could not have
          been made. We cannot countenance the view taken by the
          High Court. We may place on record that it has not been
          the case of the tenant-respondent before us, nor was it in
          the High Court, that the amount of Rs. 15,000/- assessed
D         by the Rent Control Tribunal was unreasonable or grossly
          on the higher side".
       In fact, learned Single Judge has also taken note of the
  aforesaid judgment of this Court and only thereafter, the rental
E was worked out from Rs. 600/- per month for two shops to Rs.
  2100/- per month.

       18. No doubt, it is true that learned Single Judge has
  applied his own yardstick in working out the rent but only after
F both parties' contentions were taken into account and the said
  yardstick appears to be absolutely correct and perfect method
  of working out the present market rental of the premises.
       19. Even though, the report of the valuation was not taken
  into consideration as there was none but the assessment and
G judgment of the learned Single Judge cannot be disallowed,
  even though detailed reasons have not been assigned by the
  learned Single Judge for enhancing the rate of rent because
  the ultimate conclusion arrived at by him does not suffer from
  any infirmity, illegality or perversity.
H
     MOHAMMAD AHMAD & ANR. v. ATMA RAM                            833
      CHAUHAN & ORS. [DEEPAK VERMA, J.]
     20. Thus in our considered opinion, the appeal from such             A
an interim order of the learned Single Judge, being devoid of
merit and substance deserves to be dismissed. We accordingly
do so.

      21. According to our considered view majority of these              8
cases are filed because landlords do not get reasonable rent
akin to market rent, then on one ground or the other litigation
is initiated. So before saying omega, we deem it our duty and
obligation to fix some guidelines and norms for such type of
litigation, so as to minimise landlord-tenant litigation at all levels.   c
These are as follows:-

     (i) The tenant must enhance the rent according to the terms
     of the agreement or at least by ten percent, after every
     three years and enhanced rent should then be made
     payable to the landlord. If the rent is too low (in comparison D
     to market rent), having been fixed almost 20 to 25 years
     back then the present market rate should be worked out
     either on the basis of valuation report or reliable estimates ·
     of building rentals in the surrounding areas, let out on rent E
     recently.

     (ii) Apart from the rental, property tax, water tax,
     maintenance charges, electricity charges for the actual
     consumption of the tenanted premises and for common
     area shall be payable by the tenant only so that the landlord        F
     gets the actual rent out of which nothing would be
     deductible. In case there is enhancement in property tax,
     water tax or maintenance charges, electricity charges then
     the same shall also be borne by the tenant only.
                                                                          G
     (iii) The usual maintenance of the premises, except major
     repairs would be carried out by the tenant only and the
     same would not be reimbursable by the landlord.

     (iv) But if any major repairs are required to be carried out         H
    834        SUPREME COURT REPORTS                    (2011] 6 S.C.R.

A          then in that case only after obtaining permission from the
           landlord in writing, the same shall be carried out and
           modalities with regard to adjustment of the amount spent
           thereon, would have to be worked.out between the parties.

8          (v) If present and prevalent market rent assessed and fixed
           between the parties is paid by the tenant then landlord
           shall not be entitled to bring any action for his eviction
           against such a tenant at least for a period of 5 years. Thus
           for a period of 5 years the tenant shall enjoy immunity from
c          being evicted from the premises.
           (vi) The parties shall be at liberty to get the rental fixed by
           the official valuer or by any other agency, having expertise
           in the matter.
D          (vii) The rent so fixed should be just, proper and adequate,
           keeping in mind, location, type of construction, accessibility
           with the main road, parking space facilities available
           therein etc. Care ought to be taken that it does not end up
           being a bonanza for the landlord.
E
         22. These are some of the illustrative guidelines and norms
    but not exhaustive, which can be worked out between landlord
    and tenant so as to avoid unnecessary litigation in Court.
      23. As mentioned hereinabove, the aforesaid appeal is
F dismissed with costs throughout.
           24. Counsels' fee Rs. 10,000/-.
    R.P.                                            Appeal dismissed.