Prem Ratan Vohra vs Lalitkumar Dayalji Lakhani

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1988 Supreme(Bom) 25

IN THE HIGH COURT OF BOMBAY
(Full Bench)
P.B. Sawant, B.G. Kolse-Patil G.H. Guttal, JJ.
Prem Ratan Vohra .... Petitioner.
Versus
Lalitkumar Dayalji Lakhani.... Respondent.
Writ Petitioner No. 89 of 1984, decided on 18-1-1988.
Advocates appeared :
M.L. Dudhat with P.K. Dhakephalkar, for petitioner.
K.K. Vyas with N.N. Vaishnav and B.N. Vaishnav, for respondent.

Headnote:MAHARASHTRA SUITS VALUATION (DETERMINATION OF VALUE OF LAND FOR JURISDICTIONAL PURPOSES) RULES, 1983
       Rule 2 (9).
       See Suit Valuation Act, 1887, Section 3.
       SUIT VALUATION ACT, 1887
       Section 3-Maharashtra Suits Valuation (Determination of Value of Land for Jurisdictional Purposes) Rules, 1983-Rule 2 (9) - Market value of property -Calculation of-To be based on compensation charged.
       The market value of the property can be validly arrived at by adopting either of the methods, viz. valuation of the property by the expert values as on the date of the suit or by multiplying the net income from the property by a certain multiplier.
       Once it agreed that besides the actual valuation of the property on the date of the filing of the suit, the only other mode of determining its market value is on the basis of the income that it fetches, according to us, there should be no difficulty in resolving the conflict presented by the decisions. Whether it is the owner licensor, tenant-licensor, or the ousted licensee who files the suit, what is sought to be recovered by them is the property in dispute. To them its worth is the net income it fetches or is capable fetching or the loss which its deprivation causes. The rough and ready as well as a handy measure to estimate such worth is the compensation that is charged for its occupation and agreed to between the parties minus of course all the outgoing which the licensor has to bear. The outgoings will include not only the rent, property taxes, maintenance and other charges fees and levies the licensor has to pay in respect of the premises or on account of i Is use by the licensee but also the compensation or charge for the use of the fixtures and furnitures supplied to the licensee for his use. What this compensation and outgoings will be will depend upon the facts of each case. In some cases, in addition to the compensation mentioned in the agreement, which may be nominal, the licensor might have received deposit refundable without interest. The income from such deposit calculated at the rate of interest which a nationalized bank would pay on such amount can reasonable be taken as competent of compensation. In other cases, the compensation charged may be shown together both for the premises and the fixtures and furniture or shown separately for each but split between the distortional. In such cases, the Court may have to take its calculations with regard to the reasonable compensation for the premises.
       The rental of the premises unless nothing more is actually charged, can hardly be a basis for calculating the net income particularly when the agreement stipulates compensation that is recoverable. There is no reason why the amount of compensation should be ignored and only the rent of the premises be taken as a basis. It is common knowledge that in many cases the rents are frozen statutorily and have become unrealistic whereas the compensation charged are fabulous and generally reflect the market for the premises. There may however be cases where on account of peculiar relationship between the parties or for same special considerations the licensor may in fact charge no more than rent, or the compensation charge may be meagre. Each such case may have to he adjudge on its own facts.

JUDGMENT - P.B. SAWANT, J.:---This is a Reference to the Full Bench for answering two questions of law, namely how should the market value of the suit property be arrived at for the purposes of jurisdiction of the Court-whether by valuing it on the basis of the valuer's report or on the basis of the compensation or rent that is charged to the occupant, and if it is the latter, what should be the multiplier of the compensation or rent which should determine the value.

2. The facts which have given rise to the questions, are as follows :

The petitioner before us is the defendant-licensee in the suit filed by the respondent, who is the tenant-licensor of the suit premises. The suit apremises measure 620 square feet and are situate on the first floor of Municipal House No. 22, Police Court Lane, Fort, Bombay. By a leave and licence agreement of October 5, 1967 the respondent created a licence in favour of the petitioner for a period of 11 months at the monthly compensation of Rs. 450/-. The agreement also mentioned that the defendant was given the use also of the property mentioned in the Schedule annexed to the agreement. The property so mentioned in the Schedule consisted of three racks, three old tube lights, a big water tank and electric fixtures. The agreements was renewed for two further period of 11 months each on a reduced compensation of Rs 425/- per month. The renewed period of licence expired on March 31, 1970. There is no dispute further that the rent of the suit premises was Rs. 44/- per month. The defendant fall in arrears of compensation to the tune of Rs. 12, 858/- on August, 1969. The plaintiff, therefore, revoked the licence and instituted the present suit in the City Civil Court, Bombay on November 18, 1972 for possession of the suit premises along with the property mentioned in the Schedule. In January 1973, the defendant filed his written statement and among other things took a preliminary objection to the maintainability of the suit on the ground that on a proper valuation of the suit premises the City Civil Court had no jurisdiction to entertain and try the suit. It is necessary to state here that at the relevant time the pecuniary jurisdiction of the City Civil Court did not exceed Rs. 25,000/-.

3. The Court framed a preliminary issue with regard to the jurisdiction, and by its order dated October 20, 1983 valued the suit premises at Rs. 45,720/- and held that the Court had jurisdiction to entertain and try the suit since in the meanwhile pecuniary jurisdiction of the Court was raised to Rs. 50,000/-. Since the plaintiff had valued the suit at Rs. 4,400/- on the basis of 100 times the rent of the premises as was the practice in the said Court and had paid Court-fees accordingly, the Court also directed the plaintiff to pay additional Court-fees on the basis of the said valuation of Rs. 45,720/-. It is this order which was impugned in Writ Petition No. 89 of 1984.

4. Since there was a conflict of decision between the Division Benches of this Court on the proper mode of valuation of the suit, one of us (Sawant, J.) by a speaking order of March 23, 1984, had referred the matter to the learned Chief Justice to be placed before a Full Bench. That is how the matter has come up before us for hearing on the two questions.

5. Before we advert to the relevant decision, it is necessary to refer to the provisions of the Suit Valuation Rules. In view of Rule 2(a) of the Maharashtra Suits Valuation (Determination of Value of Land for Jurisdictional Purposes) Rules, 1983, (hereinafter referred to as' the Rules'), which are made under section 3 of the Suit Valuation Act, 1887 for the purposes of jurisdiction also, the value of the property is to be deemed to be its market value. The decision which have been relied on by both sides are decisions under the Court Fees Act. Hence the ratio of the said decisions would be helpful to decide the issue of valuation of the property for the purposes of jurisdiction also.

6. The first of

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