HIGH COURT OF ALLAHBAD
DESAI, J.
Agarwal and Co.
Versus
City Board, Dehradun
Civil Revn. No.1142 of 1952
Decided On : 13-10-1952
RENT CONTROL ACT - Fixation of Rent - Unfair Transaction - Burden of Proof - Voluntary Agreement to Pay Higher Rent - Consideration of Circumstances - Right of Owner to Fix Rent - Distinction Between Transaction and Rent - Meaning of Unfair - Market Value - Application Dismissed.
Fact of the Case:
The applicant, a company, applied for fixation of rent under Section 5(4) of the Temporary Control of Rent and Eviction Act, alleging that the agreed rent of Rs.1272/- per annum for a shop was unfair and more than the reasonable annual rent of Rs.204/- fixed by the District Magistrate. The applicant had voluntarily offered and agreed to pay Rs.106/- per month as rent after competing with other bidders.
Finding of the Court:
The court held that the transaction was not unfair and dismissed the application. It found that the applicant had voluntarily agreed to pay the higher rent, and there was no evidence of any pressure, fraud, or undue advantage taken by the opposite party. The court also held that the mere fact that the agreed rent was higher than the reasonable annual rent did not make the transaction unfair.
Issues: 1. Whether the transaction was unfair within the meaning of Section 5(4) of the Temporary Control of Rent and Eviction Act? 2. Whether the applicant had voluntarily agreed to pay the higher rent? 3. Whether the owner had the right to fix the rent at any amount?
Ratio Decidendi: 1. The burden of proving the unfairness of the transaction lies on the applicant. 2. Voluntary agreement to pay a higher rent is a relevant factor in determining the fairness of the transaction. 3. The owner has the right to fix the rent at any amount in the absence of any law or agreement to the contrary. 4. The mere fact that the agreed rent is higher than the reasonable annual rent does not make the transaction unfair. 5. The court must consider the negotiations and circumstances surrounding the transaction to determine its fairness.
Final Decision: The court dismissed the application, holding that the transaction was not unfair and that the applicant had voluntarily agreed to pay the higher rent.
2. There is no dispute about the facts which are as follows : The opposite party, the City Board of Dehradun, constructed some shops after 1-7-1946, on an open piece of land owned by it by the side of Saharanpur road near the railway station of Dehradun. They were constructed with the object of letting them out to tenants. Offers were invited for the shops, which were open for inspection by the public and were let out to the highest bidders. The shop in dispute is one of them. Several persons applied to the opposite party for it, making their own offers. One man offered Rs.60/- per month as rent, another Rs.75/- and a third Rs.80/-. The applicant appeared on the scene and presented an application to the opposite party offering Rs.85/- per month. Not only did it voluntarily offer this rent, but it went further and offered to give security for the payment of the rent. More offers came for Rs.86/-and Rs.87/- per month and the applicant, within five days of its above offer, made another offer raising the rent to Rs.90/- per month. Another competitor offered Rs.92/- and the applicant then offered Rs.106/-. All these offers were made in the space of seven days. Nobody offered more than Rs.106/- per month and the opposite party accepted the offer and let out the shop to the applicant.
3. As the shop had been constructed after 01-07-46 its reasonable annual rent could be determined only by the District Magistrate. The applicant made an application to the District Magistrate for fixing it and the District Magistrate fixed it at Rs.204/-. Then the applicant started proceedings under S.5(4) of the Act for fixation of rent, claiming that the agreed rent of Rs.1272/- p.a. was more than the reasonable annual rent of Rs.204/- and alleging that the transaction was unfair. The learned Munsif held that there was nothing unfair in the transaction and dismissed his application.
4. The learned Munsif rightly fixed the responsibility upon the applicant to prove that the transaction was unfair. He also rightly held that the mere fact that the agreed rent was so much higher than the reasonable annual rent, did not by itself make the transaction unfair. It is pleasing to note that the learned Munsif withstood the temptation to declare the transaction as unfair in spite of the great disparity between the two rents. There is no foundation for the argument of Mr. A.P. Pandey that the learned Munsif non-suited the applicant on the ground that it had voluntarily agreed to pay Rs.106/- per month. Though the learned Munsif has said in his order that "It does not lie in the mouth of the plaintiff", and that "He cannot be allowed to say that the agreement was obtained by undue force", he did not at all mean to apply the doctrine of estoppel against it and not to entertain its plea of unfairness of the transaction but only meant that in view of what it had done there was no substance in its plea. He certainly entertained the plea and discussed its merits and rejected it on merits and not on the technical ground that it could not be raised. Certainly an applicant under S.5(4) who wants the rent to be fixed on the ground of unfairness of the transaction, is not to be debarred on the ground that he had voluntarily agreed to pay the agreed rent. But the fact that he voluntarily agreed to pay it is certainly one of the facts to be considered by the Court in deciding whether the transaction was unfair or not.
5. No allegtaion of any pressure, due or undue, or of any fraud of any kind has been made against the opposite party. The transaction was above-board and the parties were at arms length from each other. Nothing was concealed by the opposite party and nothing was falsely represented. The opposite party did not even take the fi
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