Computation of market value of site for fixing fair rent.

S. Padmanabhan, J.

1. The Civil Revision Petitions Nos. 2678 and 3066 of 1981 have been filed by the tenants and the landlords respectively against the order passed by the appellate authority (Subordinate Judge, Karur) under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (called the Act) in C.M.A. No. 30 of 1980 fixing fair rent for the tenanted premises. The premises in respect of which fair rent has been fixed is a non-residential building, viz., a theatre in Karur. Originally, the building had been leased to one Kuppuswami Gounder the predecessor-in-interest of the tenants on a rent of Rs. 700 per month for the building and Rs. 300 for furniture, etc. While so, the landlords filed R.C.O.P. No. 26 of 1977 for fixation of fair rent for the premises under Section 4 of the Act. The landlord's claimed that a sum of Rs. 4,620 per month would be fair and reasonable. The tenants stated in their counter-affidavit that a sum of Rs. 1,700 per month would be reasonable rent for the building and Rs. 180 for the furniture. The Rent Controller fixed the fair rent for the building at Rs. 2,065 per month and for the furniture at Rs. 200 and consolidated the amount in a sum of Rs. 2,265. The tenant did not feel aggrieved by the fixation of fair rent by the Rent Controller. However, the landlords filed C.M.A. No. 30 of 1980 before the Appellate Authority (Subordinate Judge, Karur). The Appellate Authority fixed a fair rent for the building at Rs. 3,000. Since both the parties are not satisfied with the fair rent fixed by the Appellate Authority, they have filed these civil revision petitions.

2. These civil revision petitions have been posted for being disposed of by the Bench on account of a conflict of opinion expressed by two learned Judges of this Court on the interpretation to be placed on Section 4(4) of the Act. The principal question) that arises for consideration is about the proper construction to be placed on the said section.

3. Section 4 of the Act deals with the fixation of fair rent. Section 4(1) reads as follows:

(1) The Controller shall on application made by the tenant or the landlord of a building and after holding such enquiry as he thinks fit, fix the fair rent for such building in accordance with the principles set out in the following sub-section.

Section 4(2) reads as follows:

The fair rent for any residential building shall be nine per cent. gross return per annum on the total cost of such building.

Section 4 (3) reads as follows:

The fair rent for any non-residential building shall be twelve per cent gross return per annum on the total cost of such building.

For the above, it is clear that both the landlords and the tenants can apply for the fixation of the fair rent for the building. The measure of the fair rent in respect of a residential building is 9% gross return per annum on the total cost of such building. The measure of fixation of fair rent for a non-residential building shall be 12% gross return per annum on the total cost of such building. Thus far there is no controversy between the parties.

4. Section 4 (4) of the Act which calls for interpretation in these civil revision petitions deals with the mode of computation of the total cost of the building referred to in Section 4 (2) and 4 (3) of the Act. It reads as follows:

The total cost referred to in Sub-section (2) and Sub-section (3) shall consist of the market value of the site in which the building is constructed, the cost of construction of the building and the cost of provision of anyone or more of the amenities specified in Schedule I, as on the date of application for fixation of fair rent:

Provided that while calculating the market value of the site in which the building is constructed, the Controller shall take into account only that portion of the site on which the building is constructed and of a portion up to fifty per cent. thereof of the vacant land, if any, appurtenant to such building the excess portion of the vacant land, being