# Fruit & Vege· tahle Merchants Union v. Delhi Improve· ment Trust

- **Citation:** [1957] 1 S.C.R. 20
- **Court:** Supreme Court of India
- **Decided:** 1957
- **Case number:** Nos. 32 ·to 34 of 1955
- **Bench:** Jagannadhadas, B. P. Sinha, ]Afer Imam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/fruit-vege-tahle-merchants-union-v-delhi-improve-ment-trust-1336
- **Pages:** 14

## Headnote

Rent Control-Standard rent, Fixation of-Lease providing for
a consolidated rent--Landlord undertaking to provide special amenities
including supply of electric current-Applicability of the ActDetermination of fair and reasonable rent-WeSt Bengdl Premises
Rent Cont.-ol (Temporar,Y Provisions) Act of 1950 (West Bengal XVll
of 1950), s. 9 cl. (g) Sch. A.
The appellant was the comthon landlord of the three premises.
in respect of which three analogous proceedings were started by
the respective tenants for standardisation of rent under s. 9 read
with Sch. A of the West Bengal Premises Rent Control (Temporary
Provisions) Act of 1950.
Under the terms of the lease, which
provided for a consolidated monthly rent, the landlord was
te>
provide, besides electric installations, electric current for consumption and other special amenities. His defence was that the special
incidents of the tenancies took the tenancies out of the scope of
the Act and if not, alternatively, cl. (g) of s. 9 of the Act should
apply and the rent increased proportionately to the increase in the
charges for electric current and enhanced Government duty payable
thereon.
The Rent Controller rejected the contentions and fixed·
the standard rent in· accordance with the rules laid down in Sch. A
of the Act. The Chief Judge of the Small Causes Court, on appeal
by the landlord, applied cl. (g) of s. 9 of the Act, gave relief in
respect of the higher charges for electricity and Government duty
and fixed the standard rent at a higher figure. The tenants moved
the High Court in revision and it held that cl. (g) of s. 9 did not
apply and virtually, though not entirely, affirmed the decision of
the Rent Controller.
The landlord appealed by special leave on
the qu"tstions of law involved.
Held, that the Act applied to the premises and the standard:
rent must be determined under the provisions of cl. (g) of s. 9 of
the Act and the decision of the Chief Judge restored.
S.C.R.
SUPREME COURT REPORTS
21
The term 'premises' as defined in s. 2(8) of the Act was wide
enough to cover the tenancies with their special incidents and the
consolidated monthly rent for the amenities provided by the landlord came within the comprehensive sense in which the word rent
was used by the Act and was as such liable to be controlled under
it.
The observation to the contrary made in respect of such rent
in the case of Residence Ltd. v. Surendra Mohan did not correctly
represent the legal position.
Property Holding Co., Ltd. v. Clark, (1948) 1 K. B. 630, and
Alliance Property Co. Ltd. v. Shaffer, ( 1948) 2 K. B. 464, referred to.
Residence Ltd. v.
Surendra Mohan, A.I.R. 1951 Cal. 126,
considered.
The purpose which the legislature had in view in enacting the
Act and the wide terms in whiLh it defined the term 'premises'
leave no
manner of doubt that its operative
provisions
were
intended to have a wide .application and the mere putting in of a
term. in the lease, not in terms provided for by any of the clauses.
of s. 9, could not take the tenancy out of the scope of the Act and
it would be the duty of the Court, in order that the provisions of
the Act might have full effect, to give as wide an application tothem as was permissible under the Act.
Where, as in the instant case, the lease provided for a consoli·
dated monthly rent, the
Rem
Controller and other authorities.
under the Act were empowered by the provisions of cl. (g) of s. 9to determine the standard rent on a consideration of all the·
payments that constituted the agreed rent and they did not prohibit
a recourse to such other provisions of the Act as could be applied,
either in part or as a whole, in arriving at a fair and reasonable rent.
CIVIL
APPELLATE
JuRISDICTION:
Nos. 32 ·to 34 of 1955.
Civil.
Appeals
Appeal by special leave from the judgment and
order dated September 5, 1952, of the Calcutta High
Court in Civil Revision cases Nos. 3257, 3258 and 3259
of 1951 arising out of the order dated September 7,
1951, of the Court of Small Causes

## Text

Fruit & Vege·
tahle Merchants
Union
v
Delhi Improve·
ment Trust
1956
November g,
20
SUPREME COURT REPORTS
[19571
the Control Act do not apply to the premises in question. That being so, it must be held that there is no
merit in this appeal. It is accordingly dismissed with
costs.
Appeal dismissed.
KARNANI PROPERTIES LTD.
v.
AUGUSTIN
(JAGANNADHADAS, B. P.
SINHA
AND ]AFER IMAM JJ.)
Rent Control-Standard rent, Fixation of-Lease providing for
a consolidated rent--Landlord undertaking to provide special amenities
including supply of electric current-Applicability of the ActDetermination of fair and reasonable rent-WeSt Bengdl Premises
Rent Cont.-ol (Temporar,Y Provisions) Act of 1950 (West Bengal XVll
of 1950), s. 9 cl. (g) Sch. A.
The appellant was the comthon landlord of the three premises.
in respect of which three analogous proceedings were started by
the respective tenants for standardisation of rent under s. 9 read
with Sch. A of the West Bengal Premises Rent Control (Temporary
Provisions) Act of 1950.
Under the terms of the lease, which
provided for a consolidated monthly rent, the landlord was
te>
provide, besides electric installations, electric current for consumption and other special amenities. His defence was that the special
incidents of the tenancies took the tenancies out of the scope of
the Act and if not, alternatively, cl. (g) of s. 9 of the Act should
apply and the rent increased proportionately to the increase in the
charges for electric current and enhanced Government duty payable
thereon.
The Rent Controller rejected the contentions and fixed·
the standard rent in· accordance with the rules laid down in Sch. A
of the Act. The Chief Judge of the Small Causes Court, on appeal
by the landlord, applied cl. (g) of s. 9 of the Act, gave relief in
respect of the higher charges for electricity and Government duty
and fixed the standard rent at a higher figure. The tenants moved
the High Court in revision and it held that cl. (g) of s. 9 did not
apply and virtually, though not entirely, affirmed the decision of
the Rent Controller.
The landlord appealed by special leave on
the qu"tstions of law involved.
Held, that the Act applied to the premises and the standard:
rent must be determined under the provisions of cl. (g) of s. 9 of
the Act and the decision of the Chief Judge restored.
S.C.R.
SUPREME COURT REPORTS
21
The term 'premises' as defined in s. 2(8) of the Act was wide
enough to cover the tenancies with their special incidents and the
consolidated monthly rent for the amenities provided by the landlord came within the comprehensive sense in which the word rent
was used by the Act and was as such liable to be controlled under
it.
The observation to the contrary made in respect of such rent
in the case of Residence Ltd. v. Surendra Mohan did not correctly
represent the legal position.
Property Holding Co., Ltd. v. Clark, (1948) 1 K. B. 630, and
Alliance Property Co. Ltd. v. Shaffer, ( 1948) 2 K. B. 464, referred to.
Residence Ltd. v.
Surendra Mohan, A.I.R. 1951 Cal. 126,
considered.
The purpose which the legislature had in view in enacting the
Act and the wide terms in whiLh it defined the term 'premises'
leave no
manner of doubt that its operative
provisions
were
intended to have a wide .application and the mere putting in of a
term. in the lease, not in terms provided for by any of the clauses.
of s. 9, could not take the tenancy out of the scope of the Act and
it would be the duty of the Court, in order that the provisions of
the Act might have full effect, to give as wide an application tothem as was permissible under the Act.
Where, as in the instant case, the lease provided for a consoli·
dated monthly rent, the
Rem
Controller and other authorities.
under the Act were empowered by the provisions of cl. (g) of s. 9to determine the standard rent on a consideration of all the·
payments that constituted the agreed rent and they did not prohibit
a recourse to such other provisions of the Act as could be applied,
either in part or as a whole, in arriving at a fair and reasonable rent.
CIVIL
APPELLATE
JuRISDICTION:
Nos. 32 ·to 34 of 1955.
Civil.
Appeals
Appeal by special leave from the judgment and
order dated September 5, 1952, of the Calcutta High
Court in Civil Revision cases Nos. 3257, 3258 and 3259
of 1951 arising out of the order dated September 7,
1951, of the Court of Small Causes at Calcutta, 4th
Bench, in R~nt Appeal Nos. 115, 743 and 744 of 1951.
C. K. Daphtary, Solicitor-General of India, D. N.
Mookerji and Sukumar Ghose. for the appellant.
S.C. /anah and S.N. Mookerji for the respondent.
1956. November 9.
The Judgment of the Court·
was delivered by
SINHA J.-The substantial question for determination in these three analogous appeals by special leave
ig;>
·--
Kll77Ullli
Properti.s Ltr/.
,,,
A.ugustin
Sin!iaJ.
Koma11i
l'rop<rtks Ltd.
v.
A.uguslin
Sioha].
22
SUPREME COURT REPORTS
[1957]
is whether the provisions of s. 9 of the West Bengal
Premises Rent
Control (Temporary Provisions)
Act,
1950 (which hereinafter will be referred to as "the
Act") apply to the three premises which formed the
subject matter of three separate proceedings
in
the
courts below; and, if so, which clause thereof. The
common landlord is the appellant in each case, the
respondent in each case being the tenant of the particular tenement.
In order to appreciate the points of law at issue
between the parties, it is necessary to state the relevant
facts shorn of all details relating to .the basic rent and
the standard rent fixed at different stages of
the·
proceedings. · Those details are not necessary for the
determination of these appeals. The undisputed facts
are that the appellant is seized and possessed of several
municipal holdings collectively known as the Karnani
Mansions. 25-A, Park Street, together with adjoining
premises situated at the junction of Park Street and
Free School Street in the city of Calcutta. There are
about 210 flats of different types and shop-rooms in the
said Karnani Mansions let out separately to tenants.
The tenant in each of the three cases leading up to the
appeals in this Court had been inducted by the predecessor-in-title of the appellant. In each case the tenancy
consisted of a single room, a bath and a covered
verandah. The tenant has also the use of a number of
fans.
plug points, towel
racks, besides a basin, a
commode and a glass shelf. The landlord also supplies
without any additional
charge electrical
energy for
consumption by the tenant for the use of lamps, fans,
radio. ovens for cooking, for ironing, laundering and
refrigerators.
The landlord
is
also
responsible
for
repairs of the electric installations and sanitary fittings,
as also for suoplying service of night guards, sweepers,
liftmen etc. The tenant in each case applied before the
Rent Controller of Calcutta under s. 9 read with
Schedule A of the Act for fixation of standard rent in
respect of the flat occupied
by the. applicant.
The
landlord resisted the application on the ground, inter
alia that the Rent Controller was not authorised by
the Act to deal with the tenancies in question because
••
;, -
S.C.R.
SUPREME COURT REPORTS
23
the premises were outside the scope of the Act; that
there had been a great increase in the cost of maintenance, as also of repairs and replacements of electric
and other installations, that there had been a considerable enhancement of the charge for electricity supplied
by the Calcutta Electric Supply Corporation Ltd. and
of Government duty on the same; that if the court
held that these premises were governed by the 1 provisions of the Act, the landlord was entitled to proportionate inc;ease in respect of those charges; that the fact
that the Act does not make specific provision for
increasing the
rent with reference
to the charges
aforesaid would also point to the conclusion that the
Act was not intended to be applied to the tenancies
in question. The Rent Controller after having inspections made of the premises in question fixed a standard
rent
in
accordance with the rules· laid down in
Schedule A to the Act. The rent thus standardized· was
to t.ake effect from September 1, 1950. The appellant
preferred an appeal to the Chief Judge of the Small
Cause Court; Calcutta, against the aforesaid order of
the Rent Controller. The Appellate Authority allowed
the landlord's appeal in part by sc;.tting the standard
rent at a higher figure than that arrived at by the
Rent Controller by applying the provisions of cl. (g) of
s. 9. The Appellate Authority aforesaid negatived the
landlord's contention that the premises in question
·providing the special services and amenities aforesaid
were outside the ambit of the Act. It gave the landlord
relief in respect of the higher charges for electric consumption
and
Government
duty
aforesaid.
The·
standard rent thus fixed by the appellate authority was
in excess of the original rent agreed between
the
parties. The tenant in each case moved the High Court
of Calcutta in its revisional jurisdiction. The learned
single Judge of the High Court who heard the revisional
applications allowed them in part, giving effect virtually, though not entirely, to the decision of the Rent
Controller and holding that cl. (g) of s. 9 of the Act was
not attracted to the facts
and circumstances of the
cases before the court. He relied upon a Division Bench
ruling of the same Court in the case of Residence
1956
Kamani
ProperiUs /Jd.
v.
Augustiri
Sinha].
1956
Karnani
Properties Ltd.
v.
Augustin
Sinha].
24
SUPREME COURT REPORTS
[1957J
Ltd. v. Surendra Mohan(•), which, it is agreed at the Bar,
is on all fours with the fa<;ts and circumstances of the
present case. After the rejection by the High Court of
the
appellant's
petition
for
a
certificate
under
Art. 133 of the Constitution, the appellant obtained from
this Court special leave to appeal on common questions
of law. Hence the appeals in each of these three cases
have been heard together.
In these
appeals
the
learned
Solicitor
General
appearing on behalf of the appellant . raised
substantially two points for determination, namely, (!) that
the Act does not apply to the premises in question in
view of the special incidents of the tenancy as dl~dosed
in the terms of the lease in the standard form as
.exhibited in Civil Appeal No. 42 of 1955 Exhibit J)
between the appellant and Miss M. Augustin, and as
found by the courts of fact below; and (2) alternatively, that if the Court were to come to the conclusion
that the premises in question were within the ambit of
the Act, clause (g) of s. 9 should be applied to the
tenancies in question as determined by the appellate
authority aforesaid.
Adverting to the first
point raised on behalf of the
appellant, we have to notice an argument which was
raised for the first time before us, namely, that the
definition of "premises" in s. 2(8) would not in terms
apply to the tenements in question and that if any
provisions of the Act could be attracted to these cases,
cl. (3) of s. 2 defining "hotel or lodging house" could
more appropriately be
applied
to the tenancies
in
question. As this point in this form has not been
raised in the courts below or even in the statement of
the case in this Court, we refuse to go into that question,
even assuming that the controversy thus raised
does
not require any fresh findings of fact. These cases have
not been fought on that ground and, in our opinion, it
is too late to raise for the first time a controversy in
that form. We have therefore to examine the question
whether the definition of "premises" _as contained in
s. 2(8) of the Act is not comprehensive enough to be
(1) A.I.R. 1951 Cal. 126.
. ·-
-' .
S.C.R.
SUPREME COURT REPORTS
25
applicable to these cases. The definition is m these
terms:-
" 'premises' means any building or part of a building or any hut or part of a hut let separately and
includes-
( a) the gardens, grounds and
out-houses (if any)
appertaining to such building or part of a building or
hut or part of a hut,
(b) any furniture supplied or any fittings
affixed
by the landlord for use of the tenant in such building
or part of a building or hut or part of a hut, but does
not include a room or part of a room or other accommodation in a hotel or lodging house or a stall in a
municipal market as defined in clause ( 44) of s. 3 of
the Calcutta Municipal Act, 1923, or in any
other
market maintained by or belonging to a local authority
or a stall let at variable rents at
different seasons
of
the year for the retail sale of goods in any other market
as defined in clause (39) of s. 3 of the Calcutta Municipal
Act, 1923, or clause (30) of s. 3 of the Bengal Municipal
Act, 1932".
It
has
been contended for the appellant that
"premises" thus defined do
not
include tenements
with the special facilities and conveniences agreed by
the landlord to be supplied to the tenants. In this
connection reference was made to the definition of
"premises"
as
contained in the previous
legislation
like the Calcutta Rent Act (Bengal Act III), 1920, the
Calcutta House Rent Control Order, 1943, the Calcutta
Rent Ordinance (No. V), 1946 and the West Bengal
Premises Rent Control
(Temporary Provisions)
Act,
XXXVIU of
1948, which has been replaced by the
Act. It will serve no useful purpose to_ go into the
ramifications of the definitions in the different pieces
of legislation which ~eal with the same subject matter.
We have to construe the Act as it stood. The Act has
now been replaced
by the West
Bengal Premises
Tenancy Act (Act XII), 1956. But it is agreed at the
Bar· that we are concerned with the Act as it stood
before it was replaced by the Act of 1956. The definition
of "premises" set out above is in very
wide terms
1956
K'arnani Propert~s Ltd.
..,
Augustin
Sinha].
1956
Kamani Prrr
pmus Lui.
v.
Augustin
Sinha].
26
SUPREME COURT REPORTS
[1957]
and includes not only gardens, grounds and outhouses,
if any, appertaining to a building or part of a building,
but also furniture
supplied by the landlord for
the
tenants' use and any fittings affixed to the building,.
thus indicating that the legislature was providing for
.all kinds of letting. The definition of "premises'' and
"hotel or lodging house" between them almost exhaust
the whole field covered by the relationship of landlord
and tenant, subject to the exceptions noted in the
.definition of "premises."
It is admitted at the Bar that the tenancies
m
question are regulated by
the terms and conditions
.appearing in Exhibit J, the most important of which
is clause ( 1) in the following terms :-
"That the tenant shall occupy the said flat paying
therefor unto the Bank a monthly rent of Rs. 100
including hire of 2 A.C. fans and extra Government
duty on electric current without any reduction or
abatement to be paid at the Bank on or before
the
7th of succeeding month for which the rent is due and
that the said rent is inclusive of charges for current
for fans, lights, radio and electric stove not exceeding
600 Watts for heating meals and making tea only, use
of lift, hot and cold water, the owner and occupier's
shares of Municipal Taxes."
It is clear from the terms of the clause quoted above
that the land!Ord was to place at the disposal of the
tenants ·not only electric installation including fans but
also electric current to be consumed in the use of those
installations etc., besides radio and electric
stove. It
was argued that the tenancy
comprised
not only
buildings and structures and permanent fixtures
but
also the supply of electric . power without any fresh
charge for the same. It was also pointed out that
s. 9 dealing with fixation of standard rent did not in
terms ~ontemplate the enhancement or reduction of
rent according ,a.s the rates for electric current and
Government duty thereon were enhanced or reduced.
It is true that none of the els. (a) to ( f) of s. 9 has
any reference to these considerations. Clause (b) makes
a specific reference only to increase in municipal taxes,
-..
)
S.C.R.
SUPREME COURT REPORTS
27
rates or cesses. But then there is the residuary cl. (g)
and the question whether that clause applies to the
present cases will have to be discussed separately when
the second point in controversy will be taken up for
consideration. It is enough to point out at this stage
that the legislature was conscious that contingencies
may arise which would not be covered by any of the
specific els. (a) to ( f) of s. 9 which is the operative
section in the Act relating to fixation of standard rent.
Under this head the question reduces itself to this :
whether, if by a stipulation between the landlord and
the tenant the landlord agrees to provide for additional
amenities like
electric power for consumption and
such other facilities,
the
case
is
taken out of the
operation
of
the
Act.
The Act is
intended "to
make better provision for
the control of rents
of
premises." It has defined "premises" in very wide
terms, as pointed out above. Hence it is difficult, if not
impossible, to accept the contention that the legislatureintended the provisions of the Act to have a limited
application depending upon the terms which an astute
landlord may be able to im!1me upon his tenants. In
order fully to give effect to the provisions of the
statute, the court has to give them the widest application possible within the terms of the statute. Having
those considerations in view. we do not think that the
supply of the amenities aforesaid would make
any
difference to the application of the Act to the premises
in question. In this connection reference may be made
to the decision of the Court of Appeal in the case of
Property Holding Co. Ltd. v. Clark( 1 ) and the case of
Alliance Property Co. Ltd. v. Shaffer(•) which followed
the earlier decision to the effect that if the stipulations
between landlord and tenant include payment of rent
for not only what may- properly be characterized :u
premises within the ordinary acceptation of the term
but also payment in respect of lighting, cooking equipment, the furnishing and cleaning of haH and
st~\ircasc
and certain other similar amenities, the sum total of
the payments in respect of the building or part of the
building and other services and amenities constitute
_ (1) [1948) '1 K.B. 630.
(2) [1!)48) 2 K.B. 464.
1956
K an11mi Pro-
~erties Ltd.
_y.
~llluslin
Sinha].
1956
Karnani
Properties Ltd.
''"
Augustin
Sinha].
28
SUPREME COURT REPORTS
[1957]
rent. In the earlier case of Property Holding Co. Ltd.
v. Clark (supra) the facts, shortly stated, were that the
agreement between the landlord and the tenant in
writing provided for the . payment of £110 a year as
rent and an additional payment of £30 a year in respect
of
the
additional
amenities
and
conveniences
like
lighting and. cooking equipments, furnishing and cleaning of hall and staircase etc. In an action for rent by
the landlord at the rate of £140 a year the tenant
contended that the rent proper was only £110 and not
the total sum of £140 a year payable on all counts, as
aforesaid. The Court of Appeal allowed the landlord's
appeal and held. that the standard rent was £140 and
not only £110. In the course of his judgment Asquith L.J.
adopted the language of Younger L. J. in the case of
Wilkes v. Goodwin( 1 ) to the following effect:-
"The first of these ( consideratiops) is that the word
'rent' in this exception surely means not rent in the
strict sense but the total payment under the instrument of letting. The exception assumes tha· 'rrnt' so
called may include, for example, 'board', payment of
which is not rent. I · am here paraphrasing the statement
-of Shearman J. in Nye v. Davis(') with which I agree."
Their Lordships of t11e Court of Appeal repelled the
.contention that the additional payment was not part
-of rent and held that the payment in respect of the
additional amenities aforesaid was also part of rent
within the meaning of the English Act which corresponds to the Bengal Act. Those English decisions are
authorities for the proposition that "rent" included not
-0nly what is ordinarily described as rent in an agreement between a landlord and a tenant but also payment
in respect of. special amenities provided by the landlord
under the agreement between him and his tenant.
The term "rent" has not been defined in the Act. Hence
it must be taken to have been used in its ordinary
dictionary meaning. If, as already indicated, the term
"rent" is comprehensive enough to incltllle all payments agreed by the tenant to be paid to his landlord
for the use and occupation not only of the building and
(1) (1923] • K.B. rn5.
(•) [•922] • K.B. 56.
' -
_.
-S.C.R.
SUPREME COURT REPORTS
29
its appurtenances but also of furnishings, electric
installations and other amenities
agreed
between
the
parties to be provided by and at the cost of the landlord, the conclusion is irresistible that all that is included in the term "rent" is within the purview of the Act
and the Rent Controller and other authorities had the
power to control the same. In view of these considerations we overrule the first contention raised on behalf
of the appellant.
But the second contention raised on behalf of the
appellant, in our opinion, is well founded.
"Standard
Tent" has been defined in cl. ·(10) of s. 2 as follows:-
"'standard
rent' in
relation
to
any
premises
means-
( a) the standard rent determined in accordance
with the provisions of Schedule A;
(b) where the rent has been fixed under s. 9, the
rent so fixed; or at which ilt would have been fixed if
.application were made under the said section; .......... "
This is a definition by incorporation of the· provisions
of Schedule A and of s. 9. It is common ground that
no standard rent had so far been determined in respect
of the premises in question before the present proceedings were commenced at the instance of the respective
tenants. Schedule A to the Act in clause (1) defines
"basic rent" and then cl. (2) lays down the formulae for
determination of standard rent once the basic rent
has been arrived at. The tenant in each case in the
present appeals invoked the provisions of s. 9 read
with Schedule A of the Act for fixing the standard
rent for their respective premises. The question arises
which d~use or clauses apply to the terms of the tenancy
as indicated above. Clause (a) cannot apply because it
cannot be said that "There is no cause for the alteration
of the rate of standard rent as determined according
to the schedule for anv of the reasons mentioned in the
following clauses, in a~cordance with the provisions of
Schedule A." It has not
been denied that electric
charges and the Government duty thereon have been
enhanced and that the municipal taxes also have been
increased. Clause (b) also in terms cannot apply because
1956
Kamani Propertks IJll.
"·
Augustin
Sinha ].
1956
K "'11411i Pro-
/Jl'flils Lid.
v.
bpshn
Sinha].
30
SUPREME COURT REPORTS
[1957)
it does not by itself entirely cover_ the cases in hand.
There has been increase not only in municipal taxes
but also in electric charges, Gm·ernment duty on electric consumption and in the cost of the other services
and amenities specially provided for by the agreement
between the parties. Clause ( c) is out of the way of
the parties because there is no question of addition,
alteration or imprm·ement in the premises. Clause ( d)
is similarly inapplicable because it is nobody's
case
that any furniture not already provided by the landlord has been supplied to any of the premises for the
use of the tenant. Clause ( e) also has not been claimed
by either party
to be applicable because the special
circumstances contemplated therein are not found
in
these cases. Clause (f) is clearly inapplicable because
the premises had been constructed admittedly much
earlier than December 31, 1949. The only remaining
clause is cl. (g) which is in these terms :-
"Where no provisions of this Act for fixing stand--
ard rent apply to any premises, by determining the
standard rent at a rate which is fair and reasonable."
It will appear from the terms of the contract between
the landlord and the tenant in each case, particularly
from clause ( 1) of the agreement quoted hereinbefore
that the landlord has not only agreed to supply electric
and other installations but also electric power and other
services for which no separate payment has been stipulated. It has not been denied-as a matter of fact, counsel for the tenants-respondents clearly
admitted-that
the rent fixed in each case included payment for those
additional amenities and services, though the amounts
in respect of them have been separately shown in the
agreement. The rent fixea was a consolidated sum for
all those amenities and services, as is clearly stated in
para. 1 of the agreement set out above.
But even
after making . that concession the learned . counsel for
the respondents strongly relied upon the decision of a
Division Bench of the Calcutta High Court given on
Letters _Patent Appeal from a judgment of a single
Judge of that Court, in Residence Ltd. v. Surendra
Mohan('). It has been laid· down in that case that th'e
(1) AJ.R, 1951 Cal. 126.
-
S;C.R.
SUPREME COURT REPORTS
31
Act is applicable to a tenancy the terms of: which
included such additional conveniences _and facilities as
have been provided by the landlord in these cases. W c
have already indicated that we agree with that conclusion. But the case also lays down the proposition that
what is paid as rent for the flat does not include any
payment for the additional facilities and convenienCC!I!
provided by the landlord for the use of the tenant. In
this connection the High Court made the following
observations :-
"In my judgment when a flat is let, with the landlord agreeing to provide certain free services, what is
let is th\! flat and what is paid is paid for the flat with
the landlord providing certain amenities or performing
certain obligation. What is paid is rent for the flat
and no part of it can be truly regarded as payment for
the services."
With all due deference to the views thus expressed
by that very experienced and learned Judge, we cannot
agree that those observations correctly represent the
true legal position. As a matter of fact, the learned
Judge has referred to with approval the judgments of
the Ap~al Court and of the King's Bench :Pivision in
the cases Jllentioned above to show that the term
''rent" is comprehensive enough to include not only
rent in the narrower sense of the term as ordinarily
understood but also payment in respect of the additional conveniences and amenities. The learned Judge
goes on to make the following observations :-
"If he has undertaken obligations by the tenancy
~reement the monthly payment or the yearly payment as the case may be would be suitably adjusted.
That, however, would not make the monthly or yearly
payment any the less rent."
The two parts of the observations quoted above cannot be reconciled unless it can be said that the learned
Judge is using the word "rent" not in the same sense
but in its different connotations according to the context. If the learned Judge used the word "rent" in
its comprehensive sense in which the Act must be
construed as having used that term, this part of the
3-75 S.C. India/59
-
Earaaai
Propmiu Lid.
v.
..fu,rutia
Sin/us].
Irarnani Pro·
pmies Ltd.
v.
Augustin
Sinha J.
32
SUPREME COURT REPORTS
[1957]
judgment cannot be said to be against the appellant's
contention that the standard rent must be fixed with
reference to all the constituents which made up the
lump sum as fixed in each case as rent. This position
emerges not only from a consideration of the legal
position in contemplation of the Act, but also from the
terms of the agreement between the parties, as indicated above.
The provisions of cl. (g) of s. 9 of the Act empower
the Rent Controller and the other authorities under
the Act to determine the standard rent after taking
into consideration all the constituents which make up
the total sum shown in the agreement as monthly rent.
Those
authorities
are authorised to determine rent
which is fair and reasonable. In thus arriving at a fair
and reasonable rent they are not pr;cluded from having
. recourse to such of the provisions of the Act as may be
found applicable either in their entirety or in so far as
they can be made applicable.
The
Rent
Controller
gave the landlord credit only for the amount by which
the municipal taxes had
b~en increased and no more,
by applying the provisions of cl. (b) of s. 9. The Appellate Authority on the other hand, applied. the provisio11s of cl. (g) of s. 9 by determining the fair and
reasonable rent after taking into consideration the fact
that electric charges as . also Government duty on the
consumption of electric power had been
increased.
So
had the cost of providing for the other amenities and
services. In view of our conclusion that the residuary
cl. (g) applies to the terms of the tenancy in these cases,
it follows that the decision of the Appellate Authority
was more in consonance with the provisions of cl. (g)
than that of the Rent Controller or of the High Court.
As the figures arrived at by
tne Appellate Authority
have not been challenged before us, we would direct
that the orders passed by it should be restored and
those of the High Court and of the Rent Controller set
aside.
The appeal is accordingly allowed in part as indicated above.
But in view of the directions of _this
Court at the time of granting the special leave, even
though the appellant is successful in this Court, he
-
S.C.R.
SUPREME COURT REPORTS
33
must pay the costs of the respondents, one .set of hearing fee to be equally divided amongst th<! three respondents.
Appeal allowed in part.
BARODA BOROUGH MUNICIPALITY
v.
ITS WORKMEN
(BHAGWATI,
VENKATARAMA
AYYAR, s. K. DAS
and GoVINDA MENON JJ.]
Industrial Dispute-Bonus-One department of a municipality
Jiaving surplus earnings-Whether workers engaged in that department can claim bonus-Bombay Municipal Boroughs Act, 1925 (Bom.
Act XVlll of 1925).
The Baroda Electric Supply Concern was owned and managed
by the State· of Baroda.
Immediately before the merger of the
State in the Province of Bombay, the State made a gift of the
Concern to the Baroda Municipality to provide it with a new source
of revenue as aid from the State might not be continued after the
merger.
Later in 1951, the workmen employed in the electricity
<lepartment demanded bonus and
the
dispute
was referred for
adjudication. The bonus was claimed on the basis that the electric Concern was a commercial concern, that it was making huge
profits and that the workmen were entitled to bonus as a share in
the profits.
The municipality resisted the demand, inter alia, on
the grounds that the earnings of one department could not be
treated as profits of the municipality, and that as a whole the
municipal budget for the relevant period was a deficit budget.
Held, that the workers employed in the electricity department
of the municipality were not entitled to the bonus claimed. According to the provisions of the Bombay Municipal Boroughs Act, 1925,
under which the municipality is
constituted
and
functions, the
earnings of one• department cannot be held to be gross profits in
the ordinary commercial or trading sense.
The mere fact that
separate accounts were kept of the electricity department did not
alter the position, as there was one budget for the municipality as
a whole and income from and expenses of all departments constituted the income and expenses of the municipality.
The different
activities
of the municipality
constituted one
integrated
whole,
1956
Karnani Ltd.
ProfJtrties
v.
Augustin
November 13