The determination of standard rent under Section 11(1)(a) of the Bombay Rent Act, 1947, requires the court to consider whether the contractual rent is excessive, not merely unreasonable, and that an increase in land value between the lease finalization and building construction is a relevant circumstance in this determination.

1. This is a group of 58 revision applications presented by the tenants of the Jain Cooperative Housing Society Ltd., in respect of an order dated the 22nd of April 1955 passed by the Appellate Bench of the Court of Small Causes at Bombay. The few facts that are material for the determination of these applications are these. The petitioners as tenants had applied for fixation of the standard rent alleging that the contractual rent was excessive. It appears that the buildings were ready somewhere in 1949 and were occupied thereafter by the tenants. The land on which these buildings were constructed was the subject matter of negotiations for a lease between persons who subsequently became members of the Society and the Bombay Municipality. In 1942 the Society was registered and the negotiations were continued on behalf of the Society and in 1943 the Municipality accepted the offer made on behalf of the Society to grant a lease on the basis of Rs. 9/- per square yard of the entire land. However, before the lease could be obtained, the Plot was occupied by the military and it continued to be so occupied till some time in 1947. It was only on the 1st 08 September 1947 that possession was given by the Municipality to the Society and it is thereafter that the Society started building construction.

2. Now it appears that an Appellate Bench of the Court of Small Causes at Bombay, has, in a prior judgment in what is known as Talatis case, laid down a rule for determining what is a fair and reasonable rent; and the rule is that the rent shall be equivalent to 6 per cent, on the valuation of land and 8.2/3 per cent, on the valuation of building. It is the practice of the Small Cause Court to refer the question of determination of what is a fair and reasonable rent to an architect, and when he has made his report, objections may be filed by either party before a Judge of the Court of Small Causes and there may in appropriate cases be an appeal to the Appellate Bench against the decision of the single Judge, in this particular case, the matter was referred to Mr. Divecha, architect: and the main grievance made in these applications is that Mr. Divecha valued the land, not at the price which was paid by the Society for it namely, Rs. 9/- per square yard, but at the value of the land when the building was erected on it and that value was held to be Rs. 35/-. What is canvassed on these petitions is the very interesting and undoubtedly very important question of law as to whether, in determining what is a fair and reasonable rent and for the purpose of that determination what is the valuation of the land on which a certain percentage may fairly be allowed as Part of the rent to be arrived at, the value to be taken is the value actually paid by the land- lord whenever he purchased that land, irrespective of the date of the building, or whether it is the value of such land at the time when the building was in fact put up or ready for occupation. It is the case of the applicants before me that, since what is contemplated by the provisions of the Rent Act is to secure to the landlord a fair and reasonable return, the Court ought to concern itself merely with what he has invested, whenever lie may have invested it. To this the answer of the Opponents is that, if there has been an appreciation in the value of land between the date on which the landlord purchased it and the date when he utilised it for the purpose of putting up the building, the landlord is entitled to the benefit Of such appreciation and not the tenants ; for it is argued that, if perchance the landlord had purchased the property during a boom period and at the date on which the building was put up the prices had crashed, the tenants would legitimately have claimed that the only investment of the land-lord that should be considered for the purpose of determining a fair and reasonable rent is, not what he said during the boom period, but what the !and would have cost him at