TRUST JAMA MASJID WAQF N0.31versusM/S. LAKSHMI TALKIES AND ORS.

                      [2010] 10 S.C.R. 330


A              TRUST JAMA MASJID WAQF N0.31
                                   V.
                M/S. LAKSHMI TALKIES AND ORS.
                  (Civil Appeal No. 1237 of 2004)
                          AUGUST 16, 2010
B
              [AFTAB ALAM AND R.M. LODHA, JJ.]

          Rent Control - UP. Urban Buildings (Regulation of
    Lettings, Rent and Eviction) Act, 1972 - s.29-A - Lease deed
c   in respect of subject land - Super-structure raised on the land
    - Expiry of the lease - Dispute between landlord and tenant
    as to whether there was renewal of the lease - Meanwhile,
    s. 29A inserted in the Act - Accordingly, the landlord made
    application for determination of annual rent for the land - Rent
D   Control and Eviction Officer (RCEO) computed the total cost
    of land as Rs. 12, 80, 8461- and fixed the rent at Rs. 12, 8081-
    p. m - High Court fixed the rent of the subject land at Rs. 25001
    - p. m. - On appeal, held: In absence of any agreed rent
    between the parties for the land let out to the tenants, after
E   expiry of the lease, the annual rent in respect of such land
    can be determined under s. 29A(5) on the basis of the
    prevailing market value of the land - The High Court erred
    in fixing the rent solely based on the circle rate fixed under
    the Stamp Rules since such circle rate cannot be decisive of
    the prevalent market value of the land - The High Court further
F
    erred in ignoring the valuer's report and the evidence let in
    by the landlord - The consideration of the matter by the High
    Court suffers from legal flaw and cannot be sustained -
    However, the rent determined by RCEO is a/so fundamentally
    erroneous - Case accordingly restored to RCEO for
G   determination afresh in accordance with law.

        Prior to June 1, 1970, the subject land was let out to
    a tenant who, with the consent of the appellant-landlord,
    built a super-structure (Cinema Hall) thereon.
H                              330
  TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI               331
             TALKIES AND ORS.
Respondent no.1, a registered partnership firm,                A
purchased the said super structure from the erstwhile
tenant and took the subject land on lease from the
landlord for a rent of Rs. 70/- p.m. from June 1, 1970 for a
term of. 7 years.
                                                               B
     Meanwhile the U.P. Urban Buildings (Regulation of
Lettings, Rent and Eviction) Act, 1972 came to be
amended whereby Section 29-A was inserted with effect
from July 5, 1976. In the light of the provisions contained
in Section 29-A, the appellant-landlord made an                C
application for determination of the annual rent for the
subject land before the Rent Control and Eviction Officer
(RCEO), who computed the total cost of land at. Rs.
12,80,846/- and accordingly fixed the rent at Rs. 12,808/-
p.m. Against this decision, the respondent-tenants filed
writ petition before the High Court, which allowed the writ    D
petition in part and fixed the rent at Rs. 2500/- p.m.
payable from June 1, 1984.

    The landlord contended before the Supreme Court
that the RCEO fixed the rent based on substantive              E
assessment of the factual position and, therefore, there
was no justification for the High Court to interfere with
the order of the RCEO. Per contra, the tenants submitted
that in view of the terms of the lease deed (particularly,
clauses 4 and 5 thereof), the lease stood renewed              F
automatically and rent had been enhanced w.e.f. June 1,
1977 and, therefore, Section 29-A of the 1972 U.P. Act was
not attracted.

    Partly allowing the. appeal of the landlord while
dismissing the tenants' appeal, the Court.                     G

     HELD:1. Section 29-A of the U.P. Urban Buildings
(Regulation of Lettings, Rent and Eviction) Act, 1972 came
into force w.e.f. July 5, 1976. For applicability ofSection
                                                               H
    332     SUPREME COURT REPORTS              [2010] 10 S.C.R.


A 29-A as provided by sub-section (2), two conditions must
  be satisfied, namely, (one) that land alone has been let
  out and (two) that permanent structure has been
  constructed by the tenant with landlord's consent
  incurring his own expenses. It is not important whether
B the land has been let out either before or after the
  commencement of Section 29-A. Sub-section(4) provides
  for the liability of the tenant to pay to the landlord mutually
  agreed rent and in the absence of such agreement, the
  rent as may be determined under sub section (5). The
c District Magistrate is empowered under sub-section(5) to
  determine the annual rent payable in respect of such land
  at the rate of 10% per annum of its prevailing market
  value. Such determination of annual rent can be made by
  the District Magistrate at the instance of the landlord or
  the tenant and the rent so determined is payable from the
0
  date of expiration of the lease period or from the
  commencement of Section 29-A, whichever is later. By
  virtue of sub-section (7), the provisions contained in
  Section 29-A override any term to the contrary in the
  contract between the landlord and tenant or instrument
E
  or any other existing law. The conditions stated in sub-
  section (2) of Section 29-A are satisfied in the instant
  case. [Para g] [339-C-G]

       2. Though under clauses 4 and 5 of the Lease Deed,
F the respondent-tenants have been given right of renewal
  by giving notice of at least one month before the expiry
  of the lease to the landlord for getting the lease renewed
  but, from the material on record ,it is clear that the initial
  rent as provided in the lease was enhanced to Rs. 105/-
G p.m. and the tenants continued to remain in possession
  of leased premises. Such possession of the tenants does
  not render Section 29-A inoperative. In the absence of any
  agreed rent between the parties for the land let out to the
  tenants, after expiry of lease, it is open to the landlord or
H
 TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI                333
            TALKIES AND ORS.
tenant to get the annual rent determined in respect of A
such land under sub-section (5) on the basis of the
prevailing market value. Thus, there remains no doubt
that rent of the said land is determinable under Section
29-A (5). As a matter of fact, on this aspect the finding of
the High Court is against the tenants and there is no error B
in that finding. [Para 9] [339-H; 340-A-G]

     3.1. As to the extent of rent payable by the tenants
to the landlord for the demised land, the High Court
referred to the rate of Rs. 350/- per sq. yd. fixed by the
District Magistrate under Stamp Rules and held. that the C
circle rate determined by the District Magistrate under
Stamp Rules is rather on the higher side, and accordingly
fixed the market value of the demised land on that basis.
The said view of the High Court cannot be accepted. The
circle rate fixed under the Stamp Rules is ordinarily D
general rate for a particular area and may provide some
indication but such rate cannot be decisive of the
prevalent market value of the land concerned. In the
instant case, the High Court did not take into
consideration the valuer's report and the evidence let in E
by the landlord at all. The High Court was not justified in
fixing the rent of the said land at the rate of Rs. 2500/- p.m.
s~lely based on the circle rate fixed under the Stamp
Rules. The consideration of the matter by the High Court
suffers from legal flaw and cannot be sustained. (Para 10] F
[340-G-H; 341-A-D]

    3.2 The order of RCEO also suffers from a
fundamental error. Even if it is assumed that RCEO was
right in fixing the market value of demised land at Rs.         G
12,80,846/-, the annual rent at the rate of 10% of that value
comes to Rs. 1,28,084/- and, therefore, monthly rent
determined by the RCEO at Rs. 12,808/- is clearly
erroneous. (Para 10] [341-E]

    4. In the circumstances, the orders passed by the           H
    334      SUPREME COURT REPORTS              [2010] 10 S.C.R.


A   High Court and the RCEO are set.aside. The case is
    restored to the file of RCEO for determination of the
    annual rent of the demised land afresh in accordance with
    law. The annual rent so determined shall be payable from
    the date stated in Section 29-A (5). Until the determination
B   of annual rent under Section 29-A (5) and subject thereto,
    the tenants shall pay rent to the landlord at the rate of Rs.
    10,000/- p.m. from the month of September, 2010
    provisionally. The provisional rent so paid by the tenants
    shall be adjusted against the rent that may be finally
c   determined under Section 29-A (5) of the 1972 U.P. Act.
    [Para 12] [341-G-H; 342-A-B]

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    1237 of 2004.

D        From the Judgment & Order dated 10.09.2003 of the High
    Court of Judicature at Allahabad in Civil Misc. Writ No. 12399
    of 1991.

                                WITH

E   C.A. No. 6175 of 2004.

        Rajiv Dutta, H.C. Kharbanda, T.N. Saxena, V.K. Singh,
    Shailendra Gupta, K.K. Bhati, Yash Pal Dhingra, M.P.
    Shorawala, Jyoti Saxena, Vipin K. Saxena, Sashi Kiran for the
F   appearing parties.

          The judgment of the Court was delivered by

       R.M. LODHA,J. 1. These two appeals are directed against
  the judgment and order dated September 10, 2003 passed by
G the High Court of Judicature at Allahabad. The High Court by
  that order modified the order of Rent Control and Eviction
  Officer, Mathura (for short, 'RCEO') dated March 13, 1991 and
  fixed the rent of the subject land at Rs. 2500/- p.m. w.e.f. June
  1, 1984 instead of Rs. 12,808/- p.m. fixed by the RCEO w.e.f.
H June 2, 1977.
  TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI                     335
      TALKIES AND ORS. [R.M. LODHA, J.]
      2. The brief facts are these. Trust of Jama Masjid Nawab A
Abdul Nabi Khan Chauk Bazar, Mathura (hereinafter referred
to as 'landlord') owns a piece of land admeasuring 914.89 sq.
yds. situate in Mohalla Naugaza, Mathura (for short, 'the said
land'/ 'the demised land'). Prior to June 1, 1970, the said land
was let out to some other tenant who, with the consent of the B
landlord, built a Cinema Hall thereon. M/s Laxmi Talkies, a
registered partnership firm purchased the super structure
 (Cinema Hall ) from the erstwhile tenant and took the said land
 on lease from the landlord for a rent of Rs. 70/- p.m. from June
 1, 1970 for a term of 7 years vide lease deed executed on June       c
 2, 1970. For brevity, we shall refer M/s Laxmi Talkies - lessee
 as 'tenants'. The lease provided that in case one month's prior
notice for renewal before the expiry of the lease was given by
the tenants and landlord fails to renew then the lease shall
continue for another term. The lease also provided that tenants
                                                                  0
will have a right of renewal of lease on the terms and conditions
as agreed upon but on every renewal, the tenants shall be
bound to enhance the rate of rent at 5% on total rent of the year
at the time of every renewal. The landlord claims that on expiry
of 7 years of lease, there was no agreement between the parties
with respect to renewal of lease and the rent. On the other hand, E
 the tenants claim that on expiry of first term, the lease was
 renewed from June 1, 1977 at the increased rent of Rs. 105/-
 p.m. and thereafter got automatically renewed from June 1,
 1984.
                                                                      F
      3. The U.P. Urban Buildings (Regulation of Lettings, Rent
and Eviction) Act, 1972 (for short, '1972 U.P. Act') came to be
amended by U. P. Act 28 of 1976 whereby Section 29-A was
inserted. The newly inserted Section 29-A came into force on
July 5, 1976. In the light of the provisions contained in Section     G
29-A, the landlord made an application for determination of the
annual rent for the demised land before the RCEO, Mathura
stating therein that the cost of the land leased out to the tenants
was not less than Rs. 20 lakhs and, accordingly, they are
entitled to have the rent fixed at Rs. 16,666.66 p.m. from July       H
    336      SUPREME COURT REPORTS                 [2010] 10 S.C.R.


A   5, 1976. The tenants contested the said application and raised
    the plea that the lease stood renewed from June 1, 1977
    automatically and was operative upto 1991 and, therefore, no
    rent can be increased. They also disputed that the market value
    of the land was Rs. 20 lakhs as suggested by the landlord.
8
        4. The landlord submitted affidavits in support of their claim
    along with a valuation report. The tenants filed affidavit in
    rebuttal.

         5. In his order dated March 13, 1991, RCEO held that
C   market value of land was not less than Rs. 1400/- per sq. yd.
    He thus computed the total cost of land at Rs. 12, 80,846/- and
    fixed the rent at Rs. 12,808/- p.m. Against this decision, the
    tenants filed a writ petition before the High Court. As noticed
    above, the High Court allowed the writ petition in part and fixed
D   the rent at Rs. 2500/- p.m. payable from June 1, 1984.

          6. Mr. H.C. Kharbanda, learned counsel for the landlord
    urged that the High Court erred in modifying the rent fixed by
    the RCEO on the basis of the circle rates fixed by the District
E   Magistrate under Stamp Rules by holding that such rates are
    fixed on the higher side. Learned counsel would submit that the
    RCEO on the basis of the available material and substantive
    assessment of the factual position viz., that no land is available
    for sale in the area; the demised land is situate on the main
    Mathura-Agra Road in the heart of the city and the valuation
F   report given by the government approved valuer, recorded a
    finding of fact that market value of the demised land was not
    less than Rs. 1400/- per sq. yd. and accordingly fixed the rent
    at Rs. 12808/- p.m. and, therefore, there was no justification
    for the High Court to interfere with the order of the RCEO.
G
         7. On the other hand, Mr. Rajiv Dutta, learned senior
    counsel for the tenants heavily relied upon the terms of lease
    (particularly clauses 4 and 5) and submitted that in view of these
    terms, the lease stood renewed automatically and rent had
H
  TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI                    337
      TALKIES AND ORS. [R.M. LODHA, J.]
been enhanced w.e.f. ·June 1, 1977 and, therefore, Section 29-       A
A of 1972 U.P. Act was not attracted.

     8. Section 29-A of 1972 U.P. Act which came into force
w.e.f. July 5, 1976 reads thus:

    "S.29-A. Protection against eviction to certain classes of       B
    tenants of land on which building exists. - (1) For the
    purposes of this section, the expressions 'tenant' and
    'landlord' shall have the meanings respectively assigned
    to them in Clauses (a) and (j) of Section 3 with the
    substitution of the word 'land' for the word 'building'.         C

    (2) This section applies only to land let out, either before
    or after the commencement of this section, where the
    tenant, with the landlord's consent has er~cted any
    permanent structure and incurred expenses in execution           D
    thereof.

    (3) Subject to the provisions hereinafter contained in this
    section, the provisions of Section 20 shall apply in relation
    to any land referred to in sub-section (2) as they apply in
    relation to any building.                                        E

    (4) The tenant of any land to which this section applies shall
    be liable to pay to the landlord such rent as may be
    mutually agreed upon between the parties, and in the
    absence of agreement, the rent determined in accordance          F
    with sub-section (5).

    (5) The District Magistrate shall on the application of the
    landlord or the tenant determine the annual rent payable
    in respect of such land at the rate of ten per cent per annum    G
    of the prevailing market value of the land, and such rent
    shall be payable, except as provided in sub-section (6)
    from the date of expiration of the term for which the land
    was let or from the commencement of this section,
    whichever is later.
                                                                     H
    338       SUPREME COURT REPORTS                 [2010] 10 S.C.R.


A         (6)(a) In any suit or appeal or other proceeding pending
          immediately before the date of commencement of this
          section, no decree for eviction of a tenant from any land
          to which this section applies, shall be passed or executed
          except on one or more of the grounds mentioned in sub-
B         section (2) of Section 20, provided the tenant, within a
          period of three months from the commencement of this
          section by an application to the Court, unconditionally
          offers to pay to the landlord the enhanced rent of the land
          for the entire period in suit and onwards at the rate of ten
c         per cent per annum of the prevailing market value of the
          land together with costs of the suit (including costs of any
          appeal or of any execution of other proceedings).

          (b} In every such case, the enhanced rent shall,
          notwithstanding anything contained in sub-section (5), be
D         determined by the Court seized of the case at any stage.

          (c) Upon payment against a receipt duly signed by the
          plaintiff or decree-holder or his Counsel or deposit in Court
          of such enhanced rent with costs as aforesaid being made
E         by the tenant within such time as the Court may fix in this
          behalf, the Court shall dismiss the suit, or, as the case may
          be, discharge the decree for eviction, and the tenancy
          thereafter shall continue annually on the basis of the rent
          so enhanced.
F         (d} If the tenant fails to pay the said amount within the time
          so fixed (including any extended time, if any, that the Court
          may fix or for sufficient cause allow) the Court shall proceed
          further in the case as if the foregoing provisions of this
          sedion were not in force.
G
          (7) The provisions of this Section shall have effect
          notwithstanding anything to the contrary contained in any
          contract or instrument or in any other law for the time being
          in force.
H
  TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI                   339
      TALKIES AND ORS. [R.M. LODHA, J.]
    Explanation. - For the purposes of sub-section (6) where        A
    a case has been decided against a tenant by one Court
    and the limitation for an appeal therefrom has not expired
    on the date immediately before the commencement of this
    section, this section shall apply as it applies to pending
    proceedings and the tenant may apply to that Court for a        B
    review of the judgment in accordance with the provisions
    of this section."

     9. For applicability of Section 29-A as provided by sub-
section (2), two conditions must be satisfied, namely, (one) that   C
land alone has been let out and (two) that permanent structure
has been constructed by the tenant with landlord's consent
incurring his own expenses. It is not important whether the land
has been let out either before or after the commencement of
Section 29-A. Sub-section (4) provides for the liability of the
tenant to pay to the landlord mutually agreed rent and in the       D
absence of such agreement, the rent as may be determined
under sub section (5). The District Magistrate is empowered
under sub-section (5) to determine the annual rent payable in
respect of such land at the rate of 10% per annum of its
prevailing market value. Such determination of annual rent can      E
be made by the District Magistrate at the instance of the
landlord or the tenant and the rent so determined is payable
from the date of expiration of the lease period or from the
commencement of Section 29-A, whichever is later. By virtue
of sub-section (7), the provisions contained in Section 29-A        F
override any term to the contrary in the contract between the
landlord and tenant or instrument or any other existing law. That
the conditions stated in sub-section (2)· of Section 29-A are
satisfied is not in dispute before us. What has been argued by
the learned senior counsel for the tenants is that the lease        G
provides for automatic renewal on expiry of its term and since
rent was mutually enhanced to Rs. 105/- p.m., the lease got
automatically renewed and, therefore, Section 29-A is not
attracted. We fail to perceive any force in the argument of the
learned senior counsel for tenants. Clauses 4 and 5 of the          H
    340       SUPREME COURT REPORTS                [2010) 10 S.C.R.


A   Lease Deed upon which reliance was placed by the learned
    senior counsel for the tenants read as follows:

          "4. That if the lessee duly obser,ve and perform the
          conditions and covenants herein contained in that case the
          lessees will have a right of renewal of the lease on the
B
          same terms and conditions or agreed upon, but on every
          renewal on existing rate of rent, the lessees shall be bound
          to enhance rate of rent @ 5% on total rent of the year at
          the time of every renewal.

c         5. That at least one month before the expiry of the lease
          the lessees shall communicate to the lessor for getting the
          lease renewed. In case the lessor fails to get executed the
          renewed lease the lease "shall continue for another terms."

D   It is true that under the aforenoted clauses of lease, tenants
    have been given right of renewal by giving notice of at least
    one month before the expiry of the lease to the landlord for
    getting the lease renewed but what is seen from the material
    on record is that initial rent as provided in the lease was
E   enhanced to Rs. 105/- p.m. and the tenants continued to remain
    in possession of leased premises. Such possession of the
    tenants does not render Section 29-A inoperative. In the
    absence of any agreed rent between the parties for the land
    let out to the tenants, after expiry of lease, it is open to the
    landlord or tenant to get the annual rent determined in respect
F   of such land under sub-section (5) on the basis of the prevailing
    market value. Seen thus, there remains no doubt that rent of
    the said land is determinable under Section 29-A (5). As a
    matter of fact, on this aspect the finding of the High Court is
    against the tenants and we do not find any error in that finding.
G
         10. As to the extent of rent payable by the tenants to the
    landlord for the demised land, the High Court referred to the
    rate of Rs. 350/- per sq. yd. fixed by the District Magistrate
    under Stamp Rules and held that the circle rate determined by
H   the District Magistrate under Stamp Rules is rather on the
  TRUST JAMA MASJID WAQF N0.31 v. LAKSHMI                       341
      TALKIES AND ORS. [R.M. LODHA, J.]
higher side and accordingly fixed the market value of the A
demised land on that basis. We are unable to subscribe to the
view of the High Court. The circle rate fixed under the Stamp
Rules is ordinarily general rate for a particular area and may
provide some indication but such rate cannot be decisive of
the prevalent market value of the concerned land. An exemplar B
showing sale of nearby land may help in determining the
market value of the demised land but there is no exemplar
here. The valuer's report, however, shows that the demised land
is situate on the main road from Holy Gate to Collectorate and
Civil Lines near the Roadways Bus Stand and Mathura-Cantt.,              c
Railway Station. The High Court has not taken into
consideration the valuer's report and the evidence let in by the
 landlord at all. We are, thus, satisfied that the High Court was
 not justified in fixing the rent of the said land at the rate of Rs.
2500/- p.m. solely based on the circle rate fixed under the
                                                                      0
 Stamp Rules. The consideration of the matter by the High Court
 suffers from legal flaw and cannot be sustained. The order of
 RCEO also suffers from a fundamental error. Even if it is
 assumed that RCEO was right in fixing the market value of
 demised land at Rs. 12,80,846/-, the annual rent at the rate of
 10% of that value comes to Rs. 1,28,084/- and, therefore, E
 monthly rent determined by the RCEO at Rs. 12,808/- is clearly
 erroneous.

    11. By way of foot-note, we may state that we granted an
opportunity to the parties to settle the dispute amicably as we          F
thought that it was the best way to bring an end to already two-
decade old litigation but, unfortunately, the parties failed to arrive
at mutually agreed rate of rent.

     12. In the circumstances, the order dated September 10, G
2003 passed by the High Court and the order dated March 13,
1991 passed by the Rent Control and Eviction Officer, Mathura
are set aside and Case no. 146 of 1988, Trust Jama Masjid,
Mathura Vs. M/s Laxmi Talkies and Ors., is restored to the file
of Rent Control and Eviction Officer, Mathura, for determination
                                                                         H
    342      SUPREME COURT REPORTS                [2010] 10 S.C.R.


A ·of the annual rent of the demised land afresh in accordance with
   law. Needless to say that annual rent so determined shall be
   payable from the date stated in Section 29-A (5). We further
   direct that until the determination of annual rent under Section
   29-A (5) and subject thereto, the tenants shall pay rent to the
B landlord at the rate of Rs. 10,000/- p.m. from the month of
   September, 2010 provisionally, The provisional rent so paid by
   the tenants shall be adjusted against the rent that may be finally
   determined under Section 29-A (5) of 1972 U.P. Act. The
   appeal of the landlord is allowed to the extent indicated above
   while the tenants' appeal is dismissed. No order as to costs.

    B.B.B                                    Appeal partly allowed.