CHUNlLAL VITHALDAS v. MOHANLAL MOTILAL PATEL April 15, 1965 . [K. N.-WANCIIOO, J. c. SHAH AND s. M. Snuu; JJ.] Saurashtra RenJt Control Act 22 of 1951, s. 28-Section providing for s2cor..d a.pp2aL agair~st judgment of first appelLate coUrt under
the Act-Such· second appeal whether restricted by s. 100 of Code of Civil Procedure. The TespOD.dent ·V·las the ~\vner of a buildifig used as a cinemato- graph theatre. By a registered deed dated December· 23, 1960, the appellant obtained a lease of the. theatre at · a monthly rental of Rs. 1801/-. He then applied under s. 11 of the Saurashtra Rent Control Act 22 of 1951.for an order fixing the standard rent of the. theatre. The Court of First Instance fixed the standard rent of the whole. theatre at Rs. 1030/12/-. Against th:s order the respondent filed an appeal · under s. 28(1) of the Act to the District Court. That court fixed the rental at Rs. 1150/-. Against the order of the District Court second appeal under 3' 23 (2) of the Act was preferred by the appellant to the High.Court It was dismissed under 0.41, r. 11(1); of the Code of Civil Procedure. Aggrieved. the appellant came to this Court. It vvas contended, inter alia7
that (i) a second appeal under s. 28 of the Act was not governed by s. 100 of the Code of Civil Procedure, (ii) that in calculating the cost of the ·building the courts below erred in taking into. consideration the whole price paid by the res- pondent for the land as well as the buildings standing on it at the time of purchase, and that (iii) the District Court erred in taking 7% as a~ adc9uat~ retw·n iii r~spect of the prcper~y .i1?- question. HELD: (i) .The second appeal under s. 28 of the Act may be en- tertained by the High Court within the limits provided by s. 100 of the Code of Civil Procedure, and it is not open to the parties to dei- mand reappraisal of the· evidence by the High Court on the ground that the District Court had erred in its view of the evidence. The High Court was competent to dismiss the appeal under 0.41, r. 11(1) of the Code. [184 G]
The exPression 'second appeal' in· the Code meaiiS an appeal to the High Court from the decision in a civil suit or proceeding of a first appe!late ·court subordinate to the High Court. [183 F] . · . c
The disputes directed to be dealt with under the Act are essen- tially disputes of a civil nature and the courts invested with the power under s. 27 of the Act have to adjudicate upon the disputed rights in the light of its special provisions. The procedure in the trial of suits, -applications and proceedings under the Act is the pro- cedure prescriocd by the Code of Civil Procedure except when it is otherwise provided expressly or by clear implication. (183 G] It is true that the proceedings under s. 11 do not result in a decree and that certain orders under the Act are made appealable under s. 28 though such orders are not appealable under the Code. But the right of appeal on that account is not released from the restrictions which zre attracted by its very nature. (184 A-B, F-G] i
O. VITIIALDAS V. MOTILAL PATEL (Shah, J.) Doshibai Khanna v. Sandhi Suleman Gulmamad, 6 Guj.L,R. 342 c and Nagardas Harichand v. Modi Mohanlal, S.A. No. 381 of 1960 dt. 21-9-1964, disapproved.
Union of India v. Mahindra Supply Co. [1962] 3 S.C.R. 497, dis- tinguished. (ii) The courts below did not commit any error in ta!>ing, into consideration the whole price paid by the respondent for the land and building purchased by him. A building when let out forms a com- posite unit with the land on which it stands and the rent received from the building cannot be wholly attributed to the building. [185 F-G]
(iii) On a review of the reasons given it could not be said that the District Court committed any error oJ' principle in coming to the conclusion that 7% gross return on the cost of construction should be regarded as an adequate return from the property in question. [186 G]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 427 of 1964. Appeal by special leave from the judgment and order dated August 28, 1959 of the Bombay High Court in Civil Application Na. 1638 of 1959.
Bishan Narain, J. P. Mehta, S. N. Prasad, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. R. M. Hazarnavis, K. L. Hathi, Atiqur Rehman, for the res- pondent.
The Judgment of the Court was delivered by Shah, J. Respondent in this appeal is the owner of a build· in:; used as a cinematograph theatre. By a registered deed dated December 23, 1960, the appellant obtained a lease of the theatre at a monthly rental of Rs. 1,801/-. The appellant applied under s. 11 of the Saurashtra Rent Control Act 22 of 1951 hereinafter called 'the Act'-for an order fixing the standard rent of the thea- tre. He submitted that the rent stipulated to be paid under the lease was "excessive, exorbitant and improper" and that the standard rent of the theatre, having regard to its situation and size and the amenities provided therein, could not exceed Rs. 350 /- per mensem. The respondent by his written-statement submitted that the rent stipulated under the lease was reasonable.
The Court of First Instance fixed the standard rent of the whole theatre at Rs. l,030 /J 2 /- being the one-twelfth of the gross return of 6 % on the cost of construction of the theatre and the cost of furniture installed therein. But the learned Judge held that the respondent had not delivered to the appellant possession of the basement and of a part of the building which was intended to be used for a restaurant, and on that account reduced the standard rent payable by the appellant by Rs. 220 /-
[1966] SUPP. s.c.11. Against the order of the Civil Judge. the respondent preferred A an appeal under s. 28(1) of the Act to the District Court, Gohil- wad, and the appellant preferred
cross-0bjectio11S to the order appealed from. The District Court agreed with the Trial Court that the cost of construction of the building and cost of the furni· ture was Rs. 2,06,150/-, and held that standard rent should be fixed on the basis of a return of 7 ~~ of the cost of the building and furniture, and on that footing computed the standard rent at Rs. 1,200/- per mensem. The District Court further held that possession of the space reserved for a restaurant was delivered to the appellant and since about June 1952 it was in the appellant's occupation.
It was however common ground between the parties that possession of the cellar was not delivered by the respondent C to the appellant. It was the case of the respondent that the celler
was not included in the premises let out. It was the case of the appellant that it was so included. On the view that the cellar was not included in the tenancy, the District Court directed that stan· dard rent of the premises in the occupation of the appellant be fixed at Rs. 1,150/· per me11Sem.
Against the order of the District Court, second appeal No. 552 of 1959 preferred by the appellant to the High Court of Judicature at Bombay was by order dated March 30, 1959 dismissed under 0. 41, r. 11(!) of the Code of Civil Procedure. The respondent also preferred an appeal to the High Court.
For reasons which we are unable to ascertain this appeal was not made ready for hearing before the Bombay High Court. and on reorganisation of the State of Bombay that appeal was transforrcd to the High Court of Guja- rat and we were informed at the Bar that the appeal is now pend- ing before that High Court.
Against the order of the Bombay High Court dismissing his appeal, the appellant has appealed to this Court. It is somewhat unfortunate that the appeal filed by the res· pondent has been admitted to the file and is to be heard on the merits, while the appeal filed by the appellant was summarily dis- missed.
Counsel for the appellant submitted that we should set aside the order of the High Court of Bombay, since a second ap- peal under s. 28 of the Act lay to the High Court on a question of fact as well as of law, and as there w<is "voluminous evidence" on the record which had to be considered in determining the appro- priate standard rent, the High Court of Bombay committed a grave error in summarily dismissing the appeal. We arc unable to agree with that pica.
Section 28(1) of the Act provides: "Notwithstanding anything contained in any law, but sub· n ject to the provisions of the Provincial Small Cause Court Act, as adapted and applied to the State of
c l —'\ JI C. VITHALDAS v. MOTILAL PATEL (Shah, J.) Saurashtra, an appeal shall lie from a decree or order made by a Civil Judge or a Munsiff exercising jurisdic- tion under section 27 to the District Court and a second
appeal to the High Court." ll was said that the expression "second appeal" in s. 28(1) of the Act means an appeal from an appellate decree, but restrictions imposed by s. 100 of the Code of Civil Procedure upon the power of the High Court are not attracted to a "second appeal" under s 28 of the Act. Ordinarily, says counsel for the appellant, an appellate Court is competent to examine the correctness of the decision appealed from on the ground that the decision is erroneous in point of Jaw or fact, and in the absence of any express provision to the contrary, restrictions imposed on the power of the High Court under one statute cannot be imported merely because of similarity of nomenclature, when exercising jurisdiction under another statute unless those restrictions are imposed by express enactment or necessary intendment. It was said that the State of Saurashtra has not imposed restrictions upon the power of the High Court in dealing with a second appeal under s. 28 of the Act, and the High Court was competent and was indeed bound to en- tertain all objections to the correctness of the judgment appealed from.
Jt is true that in the body of s. 100 of the Code of Civil Pro- cedure the Legislature has not used the expression "second ap- peal". That expression however occurs in the marginal note of s.
JOO and in the text of ss. IOI, 102 & 103. Section IOI is en- acted to make explicit what is clearly implied in s. 100 Code o! Civil Procedure: s. 102 prohibits second appeals from decrees in certain classes of suits; and s. 103 confers power upon the High Court to determine questions of fact in certain conditions. It is clear therefore that the expression "second appeal" in the Code means an appeal to a High Court from the decision in a civil suit or proceeding of a first appellate Court subordinate to the High Court.
Section 27 of the Act does not confer any special jurisdiction unon the courts described therein, for the Act creates no new r;ghts: it only seeks to regulate the rights and obligations of land- lords and tenants in respect of certain classes of tenancies in urban areas. The disputes directed to be dealt with under the Act are essentially disputes of a civil nature: and the courts invested with power under s. 27 of the Act have to adjudicate upon the disputed ri~hts in the light of the special provisions and not by the Transfer of Property Act and the Contract Act. The Act has again merely declared that a second appeal will lie to the High Court against decrees or orders passed by the courts exercising jurisdiction under s. 27, but thereby the essential character of a second appeal under the Code is not altered. The procedure in the trial of suit, J,rR5SCI-14
SUl'RF.llE OOURT REPORTS [1966) SUPP. 8.C.R. applications and proceedings under the Act is the procedure pres- cribed by the Code of Civil Procedure. except where it is other· wise-provided expressly or by clear implication. It is true that certain orders contemplated to be made under the Act determining rights and obligations of the parties arc made appealable under s. 28. though such orders are not appealable under the Code, but that is not a ground for holding that the Legislature intended to confer upon litigants a right of second appeal unhampered by the restrictions imposed by s. I 00 of the Code.
In Doshibai Khanna v. Sandhi S11/eman Gulmamad(') a smg1e Judge of the Gujarat High Court, following an unreported judg- ment of that Court in Nagardas Haricltand v. Modi Mohan/a/(') observed that
in a second appeal under the Act correctness of the decision of the District Court on questions of fact was liable to be canvassed in the High Court. For reasons already mention- ed, we are unable to agree with the view that in a second appeal under s. 28 of the Act, questions which may not be raised in an appeal under s. 100 of the Code of Civil Procedure may be raised. It is true that in Union of India v. Moltindra Supply Com- pany(') this Court held that by providing in s. 39(2) of the Arbi- tration Act. 1940, that "no second appeal shall lie from an order passed in appeal under this section", it was intended to prohibit an appeal under the Letters Patent.
But the Court reached that conclusion because of the scheme of the Arbitration Act. The Legislature having prohibited a second appeal under the Arbitra- tion Act, obviously the limits of the power which the Court could exercise if such an appeal were entertained could not fall to be determined in that case.
Section 11 of the Act does not contemplate that the decision of the Court determining standard rent shall be incorporated into a decree of the Court. and by s. 28 of the Act a second appeal lies to the High Court against an order determining standard rent. The orders which determine on the merits, rights and obligations of the parties arising out of the relation of landlord and tenant, may have serious consequences, and the Legislature has conferred a right of appeal to the party aggrieved by those orders.
But the right of appeal on that account is not released from the restrictions which are attracted by its very nature. We are of the view that a second appeal under s. 28 of the Act may be entertained by the High Court within the limit~ prescribed by s. I 00 of the Code of Civil Procedure, and it is not open to the parties to demand reap- praisal of the evidence by the High Court on the ground that the District Court has erred in its view of the evidence.
The High Court of Bombay was apparently of the view that no question of law arose in the appeal, and it was competent to dismiss the appeal under 0. 41, r. 11()) of the Code. —·—- ——–·—- – -·-· —— ··-
(') 6 Ouj. L.R. 3-12. (l) S.A. No. 38J of 1960 det:ided on Niptr. 21, 1954. !'I [1962] 3 S.C.R. 397. ' ,. –"'. c C, VITHALDAS V. MOTILAL PATEL (Shah, J.) It was then urged that the judgment of the Distt. Court pro- ceeded upon mis-conception of the evidence on the record, and on that account a second appeal would lie within the limits prescribed by s. 100 of the Code of Civil Procedure. It was said that in computing the cost of construction, the appellate Court had taken into consideration several items of expenditure which may not properly enter into the cost of construction.
According to the books of account of the respondent the total cost incurred by the respondent was Rs. 2,11,790/5/-. This amount included the cost of transport, miscellaneous items, pan Bidi, tips, distribution of sweets, and Pu;a totalling Rs. 8,855/15/3. The trial Judge was of the view that certain miscellaneous items were not allowable in the computation of the total cost of the building and he held that an amount of Rs. 5,640/5/- should be disallowed and with that view the appellate Court agreed. We do not think that the Courts below committed any error of law or misconceived the evi- dence in holding that only Rs. 5,640151- be disallowed out of the total cost of construction on the ground that they could not rea- sonably enter the computation.
lt was then said that the Courts below committed an error in taking into consideration the whole price paid by the respondent for the land and building purchased by him. The appellant had
purchased for Rs. 30,701/- an area of land together with houses thereon and had demolished the houses and had erected the thea- tre in respect of which this dispute has arisen. The houses had, it appears, been Jet out and rent was being received by the owner. It was urged by the appellant that the rent should be capitalised and the value of the land determined by deducting from the price paid by the respondent such capitalised value of the structure. But that would be a wholly faulty method of valuation. Rent received from a structure, is determined not merely by the nature of the structure and the accommodation provided thereby, but also by the situation and the amenities provided by the land on which the structure stands. A building when let out forms a composite unit with the land on which it stands, and the rent received from the building cannot be wholly attributed to the building. The respon- dent purchased the property with a view to pull down the houses thereon and to put up a building adapted for use as a cinemato- graph theatre. It is true that some rent was recovered from the tenants before the structures were pulled down. But since the res- ponden~ ~urchased the land and the buildings for putting up a new bmldmg thereon, he may reasonably be regarded as having paid for the property purchased the value of the land and of the debris of the superstructures. The debris which by sale fetched Rs. 9, 171 / 3 /- has been given credit for in arriving at the total cost of the theatre.
It is also worthy of note that one Masataram a consulting architect, estimated the cost of the structure to be Rs.' 2,35,777II12 L/S5SOI-14(a.) Sl11'REME COl'RT H.El'OHTt- ii 96!i j ol'l'P. 8,1 '. "·
at the rates prevailing in 1950. He stated that the prices prevail- ing in 1954 when he gave evidence were a little lower than the prices prevailing in 1950, "though in respect of certain items the prices may have gone up". The Trial Court and the District Court regarded his evidence as reliable, but having regard to the fact that in constructing the theatre the respondent hacl used >omc second-hand material. the Courts below held that the cost nf the structure was truly shown by the accounts of the respondent. and that conclusion must be accepted.
It is then urged that ordinarily in towns like Bombay, Ahmedabad and Poona standard rent is determined as eq~1i,·alent to one-twelfth of the gross return on the sum invested by the land- lord at the rate of 8.66°~ on the c:1st of the building. and at the rate of 6?{, on the value of the land. and since the
~ro" rate includes municipal taxes which vary between 25 ?:. to 33.33 •;;, of the letting value standard rent is considered as reasonable if it fetches to the landlord 4J % per annum on the value of the land and 5 j ·::. on the cost of building.
It is true that in the city of Dhavnagar no municipal taxes and rates were. at the ma:rrial time. charged by the \fonicipality. and therefore some adjustment would have to be made in ascertaining the percentage of gross return on the investment in determining
standard rent. It is common ground that charges for water supply are made by the Municipality. There is however no evidence on the recorcl to show as to what the rates for water supplied by the Municip;.!ity were. It was faintly suggested by counsel for the appellant that the water charges arc payable by the tenant. but there is nothi!1g to support that contention.
The appellate Court has. on a consi- deration of the evidence. come to the conclusion that a 'I av~rall rate of ?·::. on the investment for the building and land m::y be regarded in the town of Bhavnagar as an adequate return to the landlord.
What rate of return in respect of •he I:rndect '.'f'lperty may be regarded as reasonable in determining the standard rent under s. 11 of the Act dep~nds upon certain v"riahk factr.rs. Nor- mal expected yield from immovable property in the locality. re- turn from alternative investments. municipal and other chergcs. the use to which the property is to be r"t. its cnndit;.,!1 repairs it needs to keep it in tenantable condition and a host of other related circumstances must enter into the determination.
On a review of the reasons given. it cannot be said that the District Court committed any error of principle in coming to the C'Jnclu- sion that 7 "{, gross return on the cost of construction should l:>c regarded as an adequate return from the property in the town of Bhavnagar which is utilised for a cinematograph theatre.
Two othc1 questions remain to be considered. Eventh<•u?h it was not pleaded in the petition filed by the appellant that P\'Sscs- .sion of a part of the building let out was not delivered: the appel- lant was permitted, without objection. to raise that questicn at p
— -4._ II <•. VITllALDAS V. )!O'f!LAJ, PATEL (Shah, ./.) lk7 the trial. It was the case of the appellant that possession of the cellar and the space reserved for a restaurant were not delivered to him, and on that account appropriate deduction should be made from the standard rent. The respondent conceded that posses- sion of the cellar was not given to the appellant, but his case was that he did not deliver the cellar because it was not included in the premises demised in favour of the appellant. Unfortunately the lease has not been printed in the paper book and the parties have not chosen to produce for our perusal a copy of the lease. We have not thought it necessary to hold up the proceeding in this Court in view of the ultimate order we propose to make
in this appeal. The trial Court was of the view that having regard to the carpet area of the cellar Rs. 100 /- per mensem should be deducted from the standard rent of the entire building. The District Court without giving any reasons observed that fair standard rent for the cellar would be Rs. 50 /- per mensem. In our view the Court was not right in reducing the proportionate rent of the cellar from Rs. 100 /- to Rs. 50 /-.
The question whe- ther the cellar was let out to the appellant under the terms of the lease wili be determined by the High Court of Gujarat before which the appeal filed by the respondent is pending.
We have for the purpose of this an~eal held, agreeing with the Distt. Court. that the standard rent of the entire building is Rs. 1,200 /- per mensem. If the cellar is not included in the tenancy, Rs. 100 /- will have to be deducted and the standard rent will be Rs. 1,100/- per mensem.
The other matter in dispute relates to the space intended to be used for a restaurant. The respondent contended that posses- sion of that room was delivered to the appellant: the appellant denied that it was so delivered. It is common ground that it was part of the premises leased. Enquiry into the question whether by reason of defauit on the part of the landlord in delivering posses- sion of a part of the premises let out under the lease any loss was occasioned to the tenant and to what relief the tenant is entitled on that account is foreign to the determination of standard rent. We therefore decline to enter into the question whether possession of the space intended for use as restaurant was delivered by the respondent to the appellant.
The decision of the Courts below on that part of the case is vacated. We accordingly modify the order passed by the District Court and declare that the standard rent of the whole building including the space for the r~staurant and the cellar is Rs. 1,200 /- per men- sem.
We further declare that if the cellar is not included in the tenancy, standard rent of the premises let out will be Rs. 1,100/- per mensem. The appellant bas substantially failed in this appeal. He-will pay 7 /8th of cost of the respondent in this appeal. Appeal dismissed and decree modified.