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TMI Blog2009 (7) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.7.1988), the respondent wrote to the appellant again requesting for reassessment of the rent for the period commencing from 3.8.1988 (that is, from the date of expiry of five years from the date of last increment) by referring the matter to the Hiring Committee. Acting on the said request, the appellant again made a request to the Hiring Committee, by letter dated 25.10.1988 for re-assessment of rent. 3. The Hiring Committee (consisting of three members - (i) Superintending Engineer, Calcutta Central Circle No.II, CPWD, (ii) the Estate Manager, and (iii) Surveyor of Works cum Executive Engineer, Calcutta Central Division No.IV CPWD) by its proceedings dated 6.6.1989, reassessed and recommended a rent of Rs. 13.10 per sq.ft. of carpet area (inclusive of all municipal taxes) with effect from 3.8.1988. The appellant found the increase suggested by the Hiring Committee was unreasonably high and therefore initiated correspondence with the Hiring Committee for reviewing the reassessment. When the matter was pending, the respondent, by letter dated 27.6.1989, requested the appellant to fix the rent at Rs. 19/- per sq.ft. plus municipal taxes. 4. In the meanwhile, the respondent landl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Regional Director (ER, AMD), Department of Atomic Energy v. Rabindra Nath Nandi (A.P.O. No.243-244/1996 decided on 16.5.1997/18.9.1998) and that the appellant was bound to pay increased rent as assessed by the Hiring Committee. 8. Feeling aggrieved, the appellant challenged the order of the learned Single Judge in an appeal. By interim order dated 16.6.2003, the division bench stayed the operation of the order of the Learned Single Judge, subject to appellant depositing 50% of the rent calculated at the rate of Rs. 13/10 per sq.ft. recommended by the Hiring Committee, with liberty to the respondent to withdraw the same. The Division Bench disposed of the appeal by order dated 31.8.2006 with the following directions, purporting to follow the decision in Rabindra Nath Nandi (supra) : (i) The appellant should deposit the balance 50% of the arrears calculated at the rate of Rs. 13.10 per sq.ft. within two weeks. (ii) As the Hiring Committee had made available the details of calculations, the appellant and respondent should offer their views on the assessment of rent by Hiring Committee within four weeks. (iii) The Hiring Committee should reconsider the matter ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the impugned order dated 31.8.2006 are warranted or justified ? Re : Question No. (i) : 10. The appellant submit that the parties had entered into three lease agreements dated 11.4.1989, 10.5.1990 and 29.4.1991 in regard to the periods 1.4.1989 to 31.3.1990, 1.4.1990 to 31.3.1991 and 1.4.1991 to 31.3.1992 and all the three agreements contained an arbitration clause (Clause No. 17) providing that any dispute or difference arising between the parties, concerning the subject matter of the lease agreements or any covenant, clause or thing contained therein or otherwise arising out of the said leases, shall be referred to an arbitrator to be appointed by the Government of India and the decision of such arbitrator shall be conclusive and binding on the parties hereto. Having regard to the said provision for arbitration, the appellant contends that the remedy of the landlord-respondent, if it wanted any increase in rent, was to seek reference to arbitration and the writ petition was misconceived and not maintainable. 11. A careful reading of the arbitration clause in the lease agreements discloses that what is referable to arbitration, is any dispute or difference concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supply Act. We must, therefore, first examine whether any of these provisions of the Supply Act empowered the Board to levy the coal surcharge. We fail to see how the machinery of arbitration contained in clause (23) of the agreement can possibly cover such a question. The arbitration agreement in that clause applies only to a dispute or difference 'as to the supply of electrical energy hereunder or the pressure thereof or as to the interpretation of this Agreement or the right of the supplier or the consumer respectively to determine the same or any other question, matter or thing arising hereunder.' The question as to whether the Board had the power under Sections 49 and 59 and the Sixth Schedule to the Supply Act to levy the coal surcharge is not a question, matter or thing arising under the agreement. It is a claim founded on the provisions of the Supply Act to impose the coal surcharge in addition to the rates payable by the appellant to the Board under the agreement. Such a claim clearly falls outside the ambit and coverage of the arbitration provision contained in clause (23) of the agreement. The arbitration agreement cannot therefore, be regarded as a relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, the expertise of the Hiring Committee was required to assess the increase in rent, so as to enable the lessee departments to negotiate with the landlords to arrive at an agreed increase in rent. 14.1) The first circular regarding revision in rent was issued by the Government of India on 19th July, 1972. It directed that rents once assessed cannot be enhanced even by mutual agreement. But a request from the landlord for revision was to be forwarded by the hiring department to the CPWD. The CPWD authorities were required to decide whether the rent required an equitable revision, after ascertaining whether any of the following circumstances existed : (i) Alternations/additions to the building having been carried out by the landlord, thereby increasing its effective utilizable area; (ii)Additional facilities/amenities having been provided in the building (such as additional fans, geysers, bath rooms, additional electric appliances etc.) by the landlord, after the initial letting; (iii)Increase in the property/house tax by the local authorities; (iv)Imposition of new element of tax such as education cess by the State/Local authorities. (v) The ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Committees to follow the guidelines given below, while reassessing the rents : "(i) to work out the reproduction cost of the building as on the date of hiring based on the ruling cost of building construction in the locality. (ii) to work out the depreciated value of the property assuming a straight-line variation of depreciation depending on the age of the building. (iii) to work out the land area appurtenant to the building taking into account local bye laws or in its absence with reference to the general practice in the locality. (iv) to work out the cost of land on the basis of prevailing market rates for comparable land in the locality and also the value of land appurtenant to the building and the surplus land separately. (v) to add the cost of appurtenant land to the depreciated value of the building to assess the reasonable return on the property. (vi) to add : (a) the actual Municipal taxes; (b) maintenance and repairs (12% of the Gross returns) and (c) an appropriate provision in the form of a sinking fund for recovery of capital after expiry of life of the building (with reference to Sinking Fund Table). The said OM dated 13.6.1985 contained the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discretion of any individual officer and to lay down a uniform policy, rationalized principles were laid down by the said circulars. The said circulars regulated not only the grant of consent but also provided the method by which the consent could be accorded by the government department. (b) The policy decision contained in the said circulars did not amount to contracting out of the provisions of the West Bengal Premises Tenancy Act, 1956, as the said Act recognized the right of parties to determine by consent reasonable rate of rent payable in regard to any premises covered by the said Act. (c) As the circular dated 13.6.1985 and connected circulars were valid and binding on the Hiring Department (Government) and the Hiring Committee had the jurisdiction to assess and recommend the rent, the assessment by the Hiring Committee were binding on the Hiring Department (tenant) if the assessment has been made strictly in the manner prescribed in the circulars. (d) The Hiring Department cannot refuse to follow the recommendations of the Hiring Committee except on the ground that it was not in accordance with the circulars. If the recommendation by the Hiring Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or rents provides for fixation of rent or increases in rent, and such statute is applicable to the tenancy in question, then the rent will have to be determined in accordance with the statutory provisions. Subject to the above, any increase can be only by consent of parties. If the lease period expires and the parties are not able to agree upon the increase in rent or terms of renewal, it is open to the landlord to initiate action for evicting the tenant. But under no circumstances can the landlord require the tenant to pay during the period of a lease, a rent higher than what is agreed between them or what is provided for in the statute. The assessment or determination of rent by the Hiring Committee is an expert advice to the lessee and nothing more. Except where there is an agreement to abide by the fixation of rent by the Hiring Committee, neither party can insist or require the other party to abide by the rent assessed by such Committee, as determination of rent by the Hiring Committee is not statutory or contractually binding on the parties. 17. If the parties (lessor and lessee) agree that an increase in rent determined by the Hiring Committee will be binding on them, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. As rightly observed in Rabindra Nath Nandi, the government was aware of the fact that the Hiring Departments or their individual officers will not have the expertise to assess the rent. Therefore, it devised a procedure for assessment or reassessment of rent by an Expert Committee (Hiring Committee) whose recommendation would help the Hiring department to take a decision in regard to fixation of rent or revision of rent. But the mere fact that a mechanism had been evolved to assess or reassess the rent by the Hiring Committees or that a Hiring department had referred a demand for increase for rent by the landlord, to the Hiring Committee for its assessment/recommendation, does not mean that the assessment or reassessment of rent by the Hiring Committee is binding upon the Hiring department or the landlord. Nor will the assessment by the Hiring Committee, would create in the private landlord or the tenant (government department), an enforceable right with reference to the recommendation of rent made by the Hiring Committee, against the other party to the lease. The Hiring Committee is an expert body, and a consultant to the lessee department. In considering the recommendations ..... X X X X Extracts X X X X X X X X Extracts X X X X
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