The main legal principle established in the judgment is that the determination of market value for rent enhancement should consider the general trend of rising land values in developing countries and that a modest increase in market value, such as 5% per year, is not excessive.

( 1 ) -HEARD Shri Ramendra Asthana, learned Counsel for the petitioner and learned Standing Counsel for tenant-respondent Nos. 3 to 5.

( 2 ) THIS writ petition arises out of proceedings for enhancement of rent under section 21 (8) of Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. The building in dispute is in tenancy occupation of State of U. P. respondent No. 5 and it is having office of Deputy Excise Commissioner in the said building. In the year 1978 landlord filed application for enhancement of rent under the aforesaid provision and rent was enhanced to Rs, 1,172. 50 per month. Under the proviso to the aforesaid sub-section fresh application for enhancement of rent may be filed after five years from the date of the last order of enhancement. The rent is to be enhanced to the extent of 1/120 of market value. Total area of the building in dispute is 13340 sq. feet (16671. 50 sq. feet covered area and 11671. 50 sq. feet open area) and it is situate in Jhansi (90 Civil Lines, Jhansi ).

( 3 ) EARLIER rent was enhanced through order of District Judge dated 24. 7. 1991 passed in appeal. The application giving rise to the instant writ petition was filed in September, 1996 and was registered as case No. 3 of 1996.

( 4 ) LANDLORD claimed that market value of the land and the building constructed thereupon was 44. 33 lacs and prayed that rent might be enhanced to about Rs. 37,000/- per month. The application is dated 27. 8. 1996 but appears to have been filed in the month of September, 1996. The landlord pleaded that the market value of the land should be determined on circle rate. Valuers report filed by the landlord also, assessed the market value of the land on circle rate. The R. C. and E. O. rightly rejected the said formula. Circle rates are mere guidelines and market value cannot be determined on the basis of circle rates. However, R. C. and E. O. held that with effect from 1978 rent was enhanced to Rs. 1172. 50 (through order passed in 1996) hence during intervening period of 18 years (from 1978 to 1996) 5% increase in market value could safely be presumed (total 90% ). On the basis of the said formula rent was enhanced at Rs. 2333. 30 per month. Against the said judgment and order both the parties filed appeals being R. C. Appeal No. 15 of 1998 by landlord and R. C. Appeal No. 29 of 1998 by tenant. Learned District Judge, Jhansi dismissed the appeal of the landlord and allowed the appeal of the tenant with the result that application for enhancement of rent was rejected in toto.

( 5 ) LEARNED District Judge has held that the formula of 5% per year increase in market value adopted by the R. C. and E. O. was wholly unwarranted. I do not agree with the view taken by the learned District Judge. In developing countries market value of the land is always on the rise. Some times in some areas the rise is an high as 30% per year. However some times increase is 20% per year vide Hindustan Oil Mills Ltd. v. Special Deputy Collector (Land Acquisition)However, it cannot be said that anywhere in India the increase in market value of land may be less than 5% per year. The 5% increase assumed by R. C. and E. O. was quite modest and by no stretch of imagination it could be said to be excessive. The learned District Judge was not right to term the method adopted by R. C. and E. O. to be novel.

( 6 ) ACCORDINGLY, writ petition is allowed. Judgment and order passed by the Lower Appellate Court is set aside and judgment and order passed by the R. C. and E. O. fixing rent at Rs. 2,333. 30 per month with effect from 1. 10. 1996 is restored. Let the arrears be paid within four months. Petition Allowed.

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