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Section 17 Of Transfer Of Property Act: Pallawi Resources Ltd Vs. Protos Engineering Company 26 March, 2010

Anusha Sharma ,
  08 October 2022       Share Bookmark

Court :
Hon’ble Supreme Court
Brief :

Citation :
Civil Appeal no. 2763 of 2010.

Case Title:
Pallawi Resources Ltd v. Protos Engineering Company

Date of Order:
26 March, 2010

Judge:
V.S. Sirpurkar, Mukundakam Sharma

Parties:
Appellant: Pallawi Resources Ltd
Respondents: Protos Engineering Company

FACTS OF THE CASE

  • A lease deed dated 15.02.1969 was signed between the appellant and the respondent herein for the grant of lease for office purposes of the entire first floor of premises no. 20, Rajendra Nath Mukherjee Road, Calcutta for a period of twenty years from 01.02.1969 to 31.01.1989. The mutually agreed rent by both the parties was Rs. 2,250/- per month.
  • Upon the expiry of the term of twenty years, the appellant herein instituted a suit being before the Calcutta High Court. The appellant herein, had withdrawn the suit an order dated 18.04.2006. In the meanwhile, the West Bengal Premises Tenancy Act, 1997 came into force which repealed the earlier Act of 1956. Section 17(4A) was inserted by the West Bengal Premises Tenancy (Amendment) Act, 2002 with retrospective effect from 10.07.2001.
  • In order to increase the rent for the aforementioned premises to Rs. 13,500 per month, five times the rent that the parties had previously agreed upon, the appellant sent the respondent a notice dated March 12 pursuant to Section 20 of the West Bengal Premises Tenancy Act, 1997. This rent increase would be due and recoverable starting in the month of May 2007. The appellant served the respondent with a notice under Section 106 of the Transfer of Property Act, 1882, dated June 9, 2007, ending the tenancy and requesting that the respondent turn over unoccupied, tranquil, and khas possession of the subject premises.
  • Since the respondent continued to occupy the said premises, the appellants instituted a suit in the High Court of Calcutta under its ordinary original civil jurisdiction, praying, inter alia, for a decree of vacancy and possession of the said premisses.
  • The appellant then filed an application in which he argued that sub-section 4A of Section 17 contains a mandate for rent increases that take effect as soon as a notice to that effect is issued under Section 20, without the landlord having to perfect the demand before any other authority. The increased rent should be paid beginning with the month or period of tenancy that follows the expiration of the 30-day notice period if there is no dispute regarding the quantum, and the landlord should not be required to apply for fixation before the Rent Controller if the request is rejected without any such dispute.
  • Further, it was claimed that a landlord would only have to approach the Rent Controller to request an increase if the tenant flatly refused to accept it as advised by the landlord. However, the court denied the application in reliance on an earlier decision of the division bench of that court. As a consequence, the parties are before approached the Supreme Court for an appeal.

QUESTIONS RAISED

  • Whether the fair rent in respect of a tenancy which subsists for 20 years or more in respect of the premises constructed in or before the year 1984 which is in use for commercial purpose is essentially supposed to be determined by the by the Rent Controller ?
  • Whether it would be automatically determined under sub- section 4A of Section 17 read with Section 20 of the West Bengal Premises Tenancy Act, 1997.

ARGUMENTS ADVANCED BY THE APPELLANT

  • The appellant argued that Section 17(4A) of the West Bengal Premises Tenancy Act, 1997, as added by the 2002 Amendment Act, contemplates that, once the three prerequisites that govern the applicability of Section 17(4A) spelled out in that Section are satisfied, the determination of the fair rent would be automatic under Section 17(4A) read with Section 20.
  • The appellant's claimed that the rent is automatically fixed since Section 17(4A) specifies a formal way of doing so that simply requires a minimal amount of computation.
  • Further it was argued strongly before us that the Rent Controller is not necessary since the responsibility of fixing the rent is a ministerial one and does not include any adjudicatory procedures.

ARGUMENTS ADVANCED BY THE RESPONDENT

  • The respondent, on the other hand, contended that sub-section 4A of Section 17 has to be read in conjunction with the other sub-sections of that Section and that application of Section 17(1) which asks the rent controller to fix a fair rent.
  • The respondent also emphasised that even after the 1997 Act's amendment, Rule 8 of the West Bengal Premises Tenancy Rules, 1999, which specifies how Section 17 applications for the fixation of the fair rent should be made, has not been altered. As a result, the method for determining the fair rent is unchanged even for situations falling under sub-section 4A of Section 17.

OBSERVATION BY COURT

  • The Act of 1997's concept of "fair rent" was adopted by the court. Fair rent is defined as the rent set under Section 17 of the Act in Section 2(b), which is where the term is first used.
  • It was further noted that when a tenancy has been in place for twenty years or longer for a location built in or before 1984 and used for business purposes, the fair rent shall be calculated by adding five times the rent in effect as of July 1, 1976, or by accepting the existing rent if it exceeds the increased rent calculated under this sub-section.
  • Section 17(4A) would suggest that the three conditions which must co-exist for the applicability of that sub-section in a given case are:
  1. There must be a subsisting tenancy for twenty years or more; and
  2. The tenancy must be in respect of a premises constructed in or before the year 1984; and
  3. The premises must be used for a commercial purpose.
  • Finally, the court stated that it could only be a case of mathematical calculation yet an order in that regard is to be passed by the Rent Controller on the basis of an application filed before it by determining the quantum of such fair rent.

CONCLUSION

The Rent Controller is the authority that would assess whether there has been a presumed rise in fair rent or an automatic increase, as recommended by the appellant. The Rent Controller could only exercise his jurisdiction after receiving an application. Nobody would be aware that the concerned party has a basis for an increase in fair rent unless an application is submitted in that respect.

The court decided that this appeal should be denied, after considering the discussion above. The costs are left up to the parties.

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