TMI Blog1968 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to as the Rent Act) which received the assent of the President on 26th June, 1962, exempted from all the provisions of the Act any non-residential building or part thereof occupied by a tenant if the monthly rent paid by him in respect of the building or part exceeded ₹ 400. This exemption was later removed by Madras Act (XI of 1964) which received the assent of the President on 5th June, 1964. The tenancy under consideration here is admittedly of a non-residential building. The fair rent application which was filed during the period when there was a ceiling on the rent, above which, the Act was inapplicable to the tenancy, was laid on the basis that the rent reserved for the tenancy under the instrument of tenancy is ₹ 225 and together with an additional sum of 25 per cent of the rent reserved which is paid by the tenant, the monthly rent is within ₹ 400. 2. The tenancy in question which is for a term, commenced under and is evidenced by a registered lease deed between the tenant and the predecessor-in-title of the appellants dated 20th December, 1935. It is necessary to set out briefly the essential terms of the lease deed. The lease deed provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Act XI of 1964 which removed the exemption limit in respect of non-residential buildings was discriminatory. The question whether the Rent Act would govern contractual tenancies and the question as to the constitutional validity and legislative competency of the Act with its amendments were referred to Full Bench, and the Full Bench delivered its opinion! that the Act with its amendments was within the competency of the State Legislature and validly passed. The Full Bench held that the Act was a complete Code and it enabled both the landlord and tenant to seek the benefit of fair rent under its provisions by the special machinery provided therein, whether a contractual tenancy with different terms prevailed or had been determined. The opinion of the Full Bench is reported in Raval and Company v. K. G. Ramachandran (1966) 2 MLJ 68 . On the opinion of the Full Bench, the matter was taken up by Srinivasan, J., for consideration of the tenant's contention that the monthly rent paid by the tenant was in excess of ₹ 400, making the Act inapplicable to the tenancy. The decision of Srinivasan, J., on the 30th April, 1966 upholding the tenant's objection to the maintainabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly specified in the lease deed as payable towards tax. The learned Judge has proceeded on the basis that, if there is a sum of money, it may be rates, which a tenant agrees to pay as consideration for the tenancy, it is rent. No exception is taken before us to this proposition as one of law, but its applicability to specific amounts paid by the tenant in the context of the particular facts of the case is questioned. Dealing with the argument for the landlord that the excess taxes were taken by the landlord from the tenant under the provisions of Section 6 of the Rent Act, the learned Judge observed: I am not convinced of the correctness of this argument. It is true that Section 6 provides that where subsequent to the demise of the premises the taxes have increased, such increase not being due to an increase of rent in respect of the building, the statue comes to the rescue of the landlord and enables him to recover that excess from the tenant. But we are concerned here not with a right secured to the landlord under Section 6 of the Act, but with the position as it emerges from the agreement between the parties. The case-law that has been referred to earlier deals with such a sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly understood with reference to contractual tenancies. The contention of the tenant before the learned Judge has been--and no different stand is taken before us--that any payment which the lessor calls upon the lessee to make and the lessee agrees to pay as consideration for the privilege of enjoyment of the property demised, on whatever account that sum might be demanded, should be regarded as rent. Section 105 of the Transfer of Property Act gives the meaning of the expression lease and rent . Under that section, a lease of immovable property is a transfer of a right to enjoy such property in consideration of a price paid or promised, or of money, a share of crops, service, or any other thing of value, to be rendered periodically or on specified occasions, to the transferor by the transferee who accepts the transfer on such terms. In Karnani, Properties Ltd. v. Augustine [1957]1SCR20 , the Supreme Court observed: The term ' rent' has not been defined in the Act. Hence it must be taken to have been used in its ordinary dictionary meaning. If, as already indicated, the term ' rent' is comprehensive enough to include all payments agreed by the tenant to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards tax, paid by the tenant under the terms of the lease deed, are not part of the rent. Can this additional payment, agreed subsequent to the demise under which the tenancy is continued, be said to be consideration for the right of enjoyment of the premises with all that went with the lease? The entire case of the tenant is rested upon the subsistence of the contractual tenancy under the registered lease deed dated 20th December, 1935, which enures till 1st May, 1969. The consideration for the demise of the premises as stipulated in the lease deed provides for payment of three amounts--a sum of ₹ 225 per month as rent, a sum of ₹ 225 as annual contribution towards repairs and a sum of ₹ 220 as annual contribution towards tax. The specific term in the lease deed regarding contribution towards tax is Clause 11 which reads: The lessor shall himself pay all charges and taxes of a public nature payable on the demised premises to the Government or to any local or municipal authority and the lessee shall annually pay a sum of ₹ 220 as their contribution towards such charges and taxes. With the term as it stands, during the currency of the demise created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overable in so far as it has resulted from an increase, of rent in respect of the building. Any dispute between the landlord and the tenant in regard to any increase claimed under Section 6(1) shall, under Section 6 (2), be decided by the Controller. It may be said that, as by virtue of Section 7 of the Act, tent payable for a tenancy under a registered instrument could be varied, parties may, without resorting to proceedings under the Rent Act, settle between themselves and agree to increase or decrease the rent originally fixed. Decisions have held that, where fair rent is not fixed, there is no prohibition for an increase of the prevailing rent by mutual agreement between the parties. There may be no difficulty in this regard when the tenancy is oral or the enhancement coincides with a fresh period of tenancy as in the case of monthly tenancies, or no dispute is raised. But when the tenancy as in this case is for a term exceeding one year and necessarily by registered instrument, rent being a liability which arises and is agreed upon at the time the lease is granted, payments by the tenant to the landlord by virtue of some oral agreement subsequent to the demise and during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to reduce the rent from ₹ 2,800 to ₹ 2,000 a year was, for want of registration, inadmissible in evidence to vary the terms of the Kabuliyat, and that the alleged agreement for reduction of rent was without consideration and was not enforceable. On both points their Lordships agree with these findings of the High Court. There was no reliable and admissible evidence to prove that Raja Jaimangal Singh ever bound himself to accept a reduced rent. The fact that he did not tome years accept a reduced rent is consistent with the reduction having been a mere voluntary and temporary abatement. In Karampalli Unni Kurup v. Thekku Vittil Mothorakutti I.L.R. (1903) Mad. 195, a subsequent oral agreement to remit a portion of the rent each year under a registered least deed, corroborated by a receipt or acceptance of such payment, was held inadmissible in evidence under Proviso (4) to Section 92 of the Evidence Act in a suit for two years rent. This is not to say that, if the agreed rent falls within the purview of the Rent Act the Controller cannot, under the provisions of the Act, increase or decrease the rent while fixing fair rent under the Act nor are the parties precl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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