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Buildings (Lease and Rent Control) Act, 1965 (Kerala) – Section 5 – Fixation of Fair Rent – Reasonableness and Effective Date – Judicial Delays and Tenant Hardship.
Revision petition against fixation of fair rent at Rs.30,000/- per month for a commercial building upheld by Rent Control Court and Appellate Authority – Tenant challenged increase from Rs.3,000/- as arbitrary – Building old, lacking parking, and located on narrow road – High Court reduced fair rent to Rs.20,000/- per month, finding tenfold increase unjustifiable – Held, fair rent must reflect property condition and market realities, not impose undue hardship – Effective date of rent fixed as date of Rent Control Court’s order (27.03.2021) absent evidence justifying earlier date – Arrears due to 4-year delay allowed in 12 installments with 6% interest – Courts urged to adhere to statutory timelines and consider tentative rent fixation to prevent tenant distress.
Revision allowed, impugned orders modified.
Court : High Court of Kerala
Bench: A. Muhamed Mustaque & P. Krishna Kumar; JJ.
Case Number: R.C.Rev. No. 215 of 2024; 24 March 2025
Citations : 2025 (3) KLR 401 : 2025 KER 24335 : 2025 (2) KLT 490
Facts
- The revision petitioner (tenant) operates a wholesale and retail business selling paper bags, cups, and similar goods in a building owned by the respondent (landlord) in Thrissur, Kerala.
- The original rent agreed upon was Rs.3,000/- per month (fixed in 2004), later increased to Rs.3,300/- as per the tenant. The building measures approximately 1,100 sq. ft. (per Commissioner’s report) or 1,200 sq. ft. (per landlord).
- The landlord filed a petition under Section 5 of the Kerala Buildings (Lease and Rent Control) Act, 1965, seeking fixation of fair rent at Rs.60,000/- per month (Rs.50/- per sq. ft.), citing the building’s location in a commercially significant area of Thrissur.
- The tenant opposed the claim, arguing the building’s poor condition, lack of parking, and location on a narrow 12-ft road near a toddy shop and Beverage Corporation outlet, which caused congestion and limited accessibility.
- The Rent Control Court fixed the fair rent at Rs.30,000/- per month, which was upheld by the Rent Control Appellate Authority. The tenant challenged this in the present revision petition.
Issues
- Whether the fair rent of Rs.30,000/- per month fixed by the lower courts was reasonable and justifiable.
- Whether the fixation of fair rent from the date of filing the petition (instead of the order date) was supported by evidence.
- Whether the tenant should bear the burden of substantial arrears due to procedural delays, and if so, how to mitigate undue hardship.
Arguments
- Petitioner (Tenant):
- The increase from Rs.3,000/- to Rs.30,000/- (10 times the original rent) was arbitrary and violated settled principles for rent enhancement.
- The building is old, damaged, lacks parking, and is on a narrow road with congestion, reducing its commercial value.
- Nearby commercial institutions cited by the landlord are on major roads, not comparable to the tenanted premises.
- Respondent (Landlord):
- The building is in a prime commercial area of Thrissur, justifying a higher rent.
- The adjacent Beverages Corporation outlet (825 sq. ft.) pays Rs.54,000/- per month, supporting the claim that Rs.30,000/- for 1,100–1,200 sq. ft. is reasonable.
- The rent of Rs.3,000/- was fixed in 2004 and had not been revised, necessitating a significant increase.
Decision
- Fair Rent Reduced: The High Court found the increase to Rs.30,000/- per month arbitrary and unreasonable, considering the building’s age, condition, lack of parking, and location-related challenges. The fair rent was reduced to Rs.20,000/- per month.
- Effective Date of Rent: The lower courts fixed the rent from the date of filing the petition (pre-27.03.2021), but the High Court held there was no material evidence to justify this. However, it retained the effective date as 27.03.2021 (date of the Rent Control Court’s order) without altering it further due to lack of specific findings.
- Arrears Payment: Recognizing the undue hardship caused by judicial delays (4 years since the original order), the tenant was permitted to pay arrears (from 27.03.2021 to 24.03.2025) in 12 equal monthly installments with 6% interest per annum, rather than as a lump sum.
- Revision Allowed: The impugned orders were modified accordingly.
Ratio Decidendi
- Fair Rent Fixation: Courts must balance the commercial value of a property with its condition and accessibility. A 10-fold rent increase without sufficient justification is arbitrary and imposes undue hardship on tenants (Mohammad Ahmad v. Atma Ram Chauhan, AIR 2011 SC 1940).
- Effective Date: Fair rent should be fixed from the date of the order unless evidence shows prevailing rates at the time of filing (Thomas M. Joshua v. Church of South India Trust Association, 2019 (3) KHC 316).
- Mitigating Hardship: Procedural delays should not disproportionately burden tenants with large arrears. Courts can adopt equitable measures like installment payments to ensure fairness (Irvin John Jayarajan v. Madhavi, 2022 (7) KHC 1).
Obiter Dicta
- The Court emphasized the need for strict adherence to statutory timelines under the Rent Control Act (e.g., 4-month disposal of appeals) to prevent prejudice to tenants.
- Tentative rent fixation at the litigation’s outset or periodic enhancement based on inflation could be viable alternatives to avoid lump-sum liabilities, provided there is sufficient prima facie evidence.
Cases Referred:
- Irvin John Jayarajan v. Madhavi, 2022 (7) KHC 1
- Thomas M. Joshua v. Church of South India Trust Association, 2019 (3) KHC 316
- Mohammad Ahmad v. Atma Ram Chauhan, AIR 2011 SC 1940
Conclusion
The revision petition was allowed, reducing the fair rent to Rs.20,000/- per month effective from 27.03.2021, with arrears payable in 12 installments at 6% interest. The decision reflects a pragmatic approach to balancing landlord-tenant rights while addressing judicial delays.