The court reaffirmed that fair rent determined by Rent Control Courts must reflect current market conditions, considering economic factors and evidence of comparable properties.

ORDER :

1. Heard Mr. Harish Gopinath, learned counsel for the petitioners and Mr. S. Abdul Razzak, learned counsel for the respondent.

2. The Appellate Authority, while considering the appeal preferred by the present petitioners/tenants against the order in RCP No. 23 of 2016 fixing the fair rent at Rs. 25/- per sq. ft. per month with effect from the date of the petition, i.e., 19.05.1996, accepted the objections raised and dismissed the appeal preferred by the tenants. However, the order of the Rent Control Appellate Authority was set aside by a Coordinate Bench on 14.07.2025 after extensively referring to the decision in Edger Ferus v. Abraham Ittycheria, 2004 (1) KLT 767 affirmed by the Hon’ble Supreme Court in 2009 (4) KLT 673 SC.

3. In order to appreciate the order passed by the Coordinate Bench on remand, it is necessary to refer to the following paragraphs of the order of remand 14.07.2025:-

“4. The learned counsel for the respondents/tenants argued that the landlord has not succeeded in adducing evidence to prove the criteria mentioned in the decision of this Court in Edger Ferus v. Abraham Ittycheria, 2004 (1) KLT 767 and therefore, there is no illegality or impropriety in the order of the appellate authority warranting interference in revision.

5. There is no dispute regarding the landlord-tenant relationship and the fact that the tenant is paying monthly rent at the rate of Rs.1,200/- from 05.10.2001 onwards. Before the Rent Control Court, the landlady is examined as PW1 and the report and the sketch filed by the Advocate Commissioner are marked as Exhibits C1 and C1(a). The main contention of the tenant is that the petition schedule building is an old building and the landlady has not effected any repair.

6. In Edger Ferus (supra), it was held that while fixing fair rent, the Rent Control Court could take note of factors such as (i) inflation and resultant reduction in the purchasing power of money; (ii) variation in the cost of living index in the area since commencement of the lease; (iii) demand for accommodation and availability of the building in the locality; (iv) prevailing rent in the locality for the similar accommodation; (v) type of construction; (vi) general or special amenities provided in the building; (vii) nature of occupation; (viii) annual rental value of the building at the time of filing the application for fair rent; (ix) revision or fresh imposition of municipal taxes etc.

7. In Mohammad Ahmad v. Atma Ram Chauhan, (2011) 7 SCC 755, the Honourable Supreme Court has laid down the following guidelines to fix fair rent so as to reduce unnecessary rent control litigation and to mitigate the injustice caused to the landlord:

(i) The tenant must enhance the rent according to the terms of the agreement or at least by ten per cent, after every three years and enhanced rent should then be made payable to the landlord. If the rent is too low (in comparison to market rent), having been fixed almost 20 to 25 years back then the present market rate should be worked out either on the basis of valuation report or reliable estimates of building rentals in the surrounding areas, let out on rent recently.

(ii) Apart from the rental, property tax, water tax, maintenance charges, electricity charges for the actual consumption of the tenanted premises and for common area shall be payable by the tenant only so that the landlord gets the actual rent out of which nothing would be deductible. In case there is enhanc