ABBOBAKER AND ANR. versus MAHALAKSHMI TRADING CO.

Citation: [1998] 1 S.C.R. 762 · Decided: 10-02-1998 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
c 
ABBOBAKER AND ANR. 
v. 
MAHALAKSHMI TRADING CO. 
FEBRUARY 10, 1998 
[ S. SAGHIR AHMAD AND G.B. PATTANAIK, JJ.] 
Rent Control and Eviction 
Karnataka Rent Control Act, 1961 : Sections 14(6), 21(1)0) and 26 
to 28. 
Demolition and reconstruction of building-Eviction petition disposed 
of on the basis of compromise entered into between landlord and tenant-
Compromise stipulated that tenant would be accommodated in the new 
building after reconstruction on rent "at concessional rate of 25% less of the 
prevailing/air rent in the area"-Tenant got possession of the premises after 
D executing the compromise decree without taking recourse to right of re-entry 
into the reconstructed building under S. 27-"Fair rent"-Meaning a/-
Held : As the tenant has not taken recourse to S. 27 he is liable to pay the 
rent as agreed to under the compromise decree-Expression ''prevailing fair 
rent in the area" does not indicate the fair rent as f1Xed under S. 14 as such 
E fixation does not depend upon the prevailing rent in the area-But it 
indicates the reasonable rent received in the area in respect of similar 
premises. 
"Prevailing fair rent in the area"-Modes of arriving at-By calling 
upon the Controller to determine the same by taking evidence from the 
parties not being guided by considerations of fair rent under the statute-
F By requiring a valuer to inspect the premises and submit a report/or ultimate 
finding by Supreme Court-By calling upon the counsel for the parties to 
indicate the prevailing rent in the area in respect of the premises in possession 
of the tenant and determine the/air rent on that basis-Since first two modes 
involve protracted litigation and delay the last mode is preferred in the 
interest of justice-Hence, having regard to the suggestions given at the Bar, 
G the location of the premises, the rent at which the tenant was occupying the 
earlier premises which stood demolished and the new construction, the 
prevailing fair rent in the area f1Xed by Supreme Court under Art. 142 for 
the premises in question with a view to doing complete justice in the matter-
Constitution of India, 1950, Art. 142. 
H 
The appellant-landlord filed an eviction petition against the tenant-
762 
' Jy 
, 
,. 
ABBOBAKER v. MAHALAKSHMI TRADING CO. 
763 
respondent. The said eviction )letition was disposed of on the basis of a A 
{ 
compromise entered into between the landlord and tenant. The compromise 
... 
petition formed a )!art of the decree of the court. The compromise sti)lulated 
that the tenant would be accommodated in the new building after re-construction 
on a rent "at concessional rate of 25% less of the prevailing fair rent in 
the area." After the building was re-constmcted the tenant got the 11ossession B 
of the Jlremises by executing the compromise decree without taking recourse 
to Section 27 of the Karnataka Rent Control Act, 1961. 
The a11pellant-landlord approached the High Court contending that the 
res)Jondent-tenant could not have merely obtained possession of the premises 
without 11aying the rent as stipulated in the compromise decree. The c 
res11ondent-tenant contended that the tenant would be liable to pay 25% less 
of the fair rent to he determined by the Controller under Section.14 of the 
.... 
Act. The High Court held that the fair rent of the premises had to be 
determined by the Controller under Section 14 of the Act. The High Court 
further held that the tenant would be liable to pay the rent at a concessional D 
rate of 25% less of such fair rent determined by the Controller. Being 
aggrieved by the High Court's judgment the ap)lellant-landlord preferred the 
)!resent ap)leal. 
Allowing the appeal, this Court 
E 
HELD: 1.1. Section 27 of the Karnataka Rent Control Act, 1961 
;'.,;_ 
recognises the tenant's right of re-entry into the reconstructed building. 
But, in the present case, the tenant has not taken recourse to the procedure 
11rescribed under Section 27 for exercising his right of re-entry but on the 
other hand has got back 11ossession by executing the compromise decree. F 
.)-
Hence, the tenant is liable to pay the rent as agreed to under the compromise 
decree. [768-E-H] 
2.1. The exJlression "prevailing fair rent in the area" does not indicate 
the 'fair rent' as fixed by the Controller under Section 14 of the Act as such 
fixation does not depend upon the prevailing rent in the area. But it indicates G 
the reasonable rent received in the area in res)lect of similar pr

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