Case Note & Summary
The dispute arose from a lease of a cinematograph theatre in Saurashtra. The appellant, a tenant, obtained a registered lease dated December 23, 1960, at monthly rent of Rs. 1,801. Claiming the rent excessive, the appellant applied under Section 11 of the Saurashtra Rent Control Act, 1951, for fixation of standard rent. The respondent landlord contested, asserting the rent was reasonable. The Court of First Instance fixed standard rent of the whole theatre at Rs. 1,030/12 per month, based on 6% gross return on cost of construction and furniture, but reduced it by Rs. 220 due to non-delivery of basement and part of restaurant area. The respondent appealed to the District Court under Section 28(1), and the appellant cross-objected. The District Court agreed on cost at Rs. 2,06,150 but applied 7% return, computed standard rent at Rs. 1,200 per month, held restaurant space delivered and cellar not included, ultimately fixed standard rent at Rs. 1,150 per month. The appellant's second appeal to Bombay High Court was dismissed summarily under Order 41 Rule 11(1) CPC on March 30, 1959. The respondent's separate appeal was transferred to Gujarat High Court and remained pending. The appellant then appealed to Supreme Court by special leave. The core legal issues were whether a second appeal under Section 28 of the Rent Act is governed by Section 100 CPC; whether the lower courts erred in including the entire purchase price of land and building in cost; and whether 7% return was adequate. The appellant contended that second appeal under the Act was not restricted by Section 100 CPC, and that High Court should have reappraised voluminous evidence. He also argued that land cost should not be included and 7% return was inadequate. The respondent supported the lower courts' findings. The Supreme Court, speaking through Shah, J., rejected the appellant's first contention. It reasoned that the expression 'second appeal' in the Code means an appeal to the High Court from a first appellate court subordinate to it. Proceedings under the Rent Act are civil in nature, and the procedure prescribed by CPC applies except where otherwise provided. Although certain orders under the Act are made appealable, the right of appeal is not released from restrictions attracted by its nature. Therefore, a second appeal under Section 28 is subject to Section 100 CPC, and the High Court cannot reappraise evidence. The Court distinguished Union of India v. Mohindra Supply Co., and disapproved two Gujarat High Court decisions that allowed factual reappraisal. On the second issue, the Court held that a building let out forms a composite unit with land, and rent cannot be wholly attributed to the building, so whole price paid for land and building was correctly included. On the third issue, after reviewing reasons, the Court found no error of principle in the District Court's adoption of 7% gross return. Accordingly, the Supreme Court dismissed the appeal, affirming that the High Court was competent to dismiss the second appeal in limine under Order 41 Rule 11(1) CPC and upholding the standard rent determination.
Headnote
A) Civil Procedure - Second Appeal - Scope of Section 100 CPC - Saurashtra Rent Control Act, 1951, Sections 27, 28; Code of Civil Procedure, 1908, Sections 100, 101, 102, 103, Order 41 Rule 11(1) - The High Court is competent to dismiss a second appeal under the Rent Act in limine under Order 41 Rule 11(1) CPC because such appeal is governed by Section 100 CPC. Held that the expression 'second appeal' in the Code means an appeal to the High Court from a first appellate court subordinate to it; proceedings under the Rent Act are essentially civil and CPC procedure applies unless otherwise provided; the right of appeal is not released from restrictions attracted by its nature; questions of fact cannot be canvassed in second appeal. (Paras [183 F]-[184 G]) B) Rent Control - Standard Rent - Cost of Land and Building - Saurashtra Rent Control Act, 1951, Section 11 - Lower courts correctly included the whole price paid for land and building in computing cost of construction. Held that a building let out forms a composite unit with the land on which it stands, and rent received cannot be wholly attributed to the building; therefore no error in including entire purchase price. (Paras [185 F-G]) C) Rent Control - Standard Rent - Adequate Return - Saurashtra Rent Control Act, 1951, Section 11 - District Court did not commit any error of principle in concluding that 7% gross return on cost of construction was adequate return for the property. Held that on review of reasons, the conclusion was proper and no interference was warranted. (Paras [186 G])
Issue of Consideration
Whether a second appeal under Section 28 of the Saurashtra Rent Control Act, 1951 is restricted by Section 100 of the Code of Civil Procedure, 1908; Whether lower courts erred in including whole price paid for land and building in cost of construction; Whether District Court erred in taking 7% as adequate return on cost for fixing standard rent
Final Decision
The Supreme Court dismissed the appeal, holding that a second appeal under Section 28 of the Saurashtra Rent Control Act, 1951 is governed by Section 100 of the Code of Civil Procedure, 1908, and the High Court was competent to dismiss it under Order 41 Rule 11(1) CPC. The Court also upheld the lower courts' computation of standard rent by including whole cost of land and building and adopting 7% gross return.
Law Points
- Second appeal under Section 28 Saurashtra Rent Control Act
- 1951 is governed by Section 100 CPC
- Expression 'second appeal' in CPC means appeal to High Court from first appellate court subordinate to it
- Rent Act disputes are civil in nature and CPC procedure applies unless otherwise provided
- High Court cannot reappraise evidence in second appeal
- Building let out forms composite unit with land and rent cannot be wholly attributed to building
- 7% gross return on cost of construction is adequate return for standard rent computation
