TMI Blog2009 (7) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... premises was taken on lease on 1.6.1972 on a monthly rent of ₹ 13,733/- (at the rate of ₹ 0.85 per sq. ft.). On a request by respondent for increase in rent, the appellant made a reference to the Hiring Committee for reassessment on 1.4.1986. Based on its recommendation, the rent was increased to ₹ 74,645/- per month (that is ₹ 4.62 per sq. ft.) with retrospective effect from 3.8.1983 and the increase was communicated as per the appellant's letter dated 27.7.1988. The very next day (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, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accordingly. The writ petition was allowed by a Learned Single Judge, by order dated 22.8.2002, directing the appellant to pay the rent in regard to the period 3.8.1988 to 25.6.1992, to the respondent in accordance with the recommendations of the Hiring Committee, within 6 weeks with interest at the rate of 8.33% from 1998 till date of payment and in default to make payment within 6 weeks, pay interest at 10% per annum. The learned Single Judge was of the view that the matter was covered by a decision of the division bench of that High Court 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 ₹ 13/10 per sq.ft. recommended by the Hiring Committee, with liberty to the respondent to withdraw the same. The Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay any increased rent. On the contentions urged, the following questions arise for our consideration : (i) Whether the writ petition by the respondent was not maintainable, in view of clause 17 of the lease agreements dated 11.4.1989, 10.5.1990 and 29.4.1991 providing for settlement of disputes by arbitration ? (ii) Whether the recommendation by the Hiring Committee was binding on the appellant and whether the respondent- landlord could enforce payment of the rent recommended by the Hiring Committee ? (iii)Whether the directions issued by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 and 29.4.1991, therefore, did not cover or govern the issue raised in the writ petition. Therefore the arbitration clause in the three lease agreements would not come in the way of the writ petition being entertained. We are fortified in our view by the decision in Titagarh Paper Mills Ltd. v. Orissa State Electricity Board [1975 (2) SCC 436] wherein this Court held : ... when the Board decided to levy the coal surcharge on the consumers receiving electricity from the Talcher-Hirakund grid, it claimed to do so under Sections 49 and 59 and the Sixth Schedule to 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 qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings on rent. A somewhat similar difficulty was also faced when it became necessary to increase the rent at the time of renewal or extension of lease, as refusal to increase rents, after the expiry of the lease period was likely to result in action for eviction. It was therefore necessary to periodically re-assess the rent for purpose of revising the rent. Where the contracts of lease did not provide for periodical increases, subject to facts and circumstances of each case, it was thought fit to increase the rent every five years, by consent of both parties. Here again, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent. (2) In all such cases or reassessment of reasonable rent, a fresh lease agreement in the form prescribed was to be entered into with the concerned landlord. (3) Wherever Hiring Committees were functioning (such as in Bombay, Calcutta, Delhi etc.), refixation of rent was to be done by such committees and intimated to the concerned departments with details. (4) All the Ministries/Departments were required to finalize the cases of reassessment of rents in consultation with the concerned Hiring Committee. 14.5) The last OM dated 13.6.1985 required the Hiring 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment of rent of leased building will be treated as fresh case of rent assessment and may be done according to the same principles as discussed in the preceding paragraphs. (emphasis supplied) 15. In Rabindra Nath Nandi, which was followed by the impugned judgment, the Calcutta High Court after referring to the O.Ms. dated 19.7.1972, 1.9.1982, 9.5.1983, 22.8.1984 and 13.6.1985 concluded as under : (a) The five circulars (Official Memoranda) in effect provided for and envisaged revision of rent by consent. As the revision of rent could not be left to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the elaborate decision in Rabindra Nath Nandi missed the core issue and ignored the relevant law governing landlords and tenants. A lease is governed by the terms of the contract (deed or agreement of lease) between the parties. If the contract prescribes a rent for the period of lease, the same being agreed rent, it is binding on the parties. If the lease provides for revision of rents periodically, and specifies the method and manner of revision, such revised rent would also be the agreed rent. Where a statute governing tenancies 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or reassessment of rent by the Hiring Committee will be only recommendatory and not binding upon the Hiring Department, which takes the premises on lease from the private landlord. The OM dated 13.6.1985 specifically states that the final decision regarding the actual rent to be paid to the owner of the building will rest with the authorities desiring to hire the property keeping in view the two figures of rent indicated in the certificate, their own needs and availability of the accommodation in the locality at the rent to be determined. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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