Dismissed

Tarla N. Morjaria and Ors. v. Bipin Hiralal Shah and Anr.

Bombay HC28 Mar 2007CHS/261/2007

Case brief

AI extract

What is this about?

In a dispute regarding the determination of royalty amount on suit premises by the Court Receiver, the High Court upheld the Receiver's order fixing the royalty at Rs.4900/- per month. The Court found the amount reasonable as it fell between the plaintiffs and defendants' calculated figures and refused to interfere with technical arguments absent evidence of market rates.

What did the court decide?

The challenge to the Court Receiver's royalty order is dismissed, and the order fixing royalty at Rs.4900/- p.m. is upheld.

Tarla N. Morjaria and Ors. Vs Bipin Hiralal Shah and Anr. — Consumer Protection | Bombay HC (2007)

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IN	THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO.261 of 2007 IN
	SUIT NO.3853 OF 2002
Tarla N.Mo Bipin Hiral	rjaria & ors .. Plaintiffs vs al Shah & anr.. Defendants
WITH	CHAMBER SUMMONS NO. 351 OF 2006 IN
SUIT	NO.3853 OF 2004
Tarla N.Mo Bipin Hiral	rjaria & ors . Plaintiffs vs al Shah & anr ..Defendants
Mr.Sanjay Plffs	Jain with Ms.K.A.Shah i/b A.G.Shah for
Mr.Nilesh	Modi a/w Ms.Deepali Thakor
i.b	Rustamji & Ginwala for Defendants CORAM : A.M.KHANWILKAR, J
	DATE : 28th March, 2007
P.C.
1.	This order will dispose of both the Chamber
Summons	taken out by the respective parties. Both
the	parties seek to challenge the correctness of
the	view taken by the Court Receiver in his order
dated	2nd February 2007 determining the royalty
amount	in respect of the disputed property at the
rate	of Rs.4900/- p.m. For reaching that
conclusion,	the Court Receiver has taken into
account	the valuation of the suit property which is
1	room admeasuring 198 sq.feet built up area (i.e.
165	sq.ft carpet area) as Rs.6,50,000/-. He has

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then provided for depreciation at the rate of of 20 % thereon. On that depreciated value, he has provided for return at the rate of 9 % pa, thus rounded up royalty amount as Rs.4,900/- p.m.

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2. According to the defendants, the amount of royalty so determined by the Court Receiver is excessive whereas the plaintiff would contend that the said amount is inadequate.

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3.	According to	the	plain	tiffs,	the	royalty	amount
should	be not less	than	Rs	.9,653/-p.	m.	This	figure
is	arrived at b	y	th	e p	laintiffs	on	first
considering	the valua	tion	of	the	property	on	the
basis	of Ready Recko	ner	and	then	providing	50	%
depreciation	on the c	onstru	ction	cost	there	of.	The
valuation	of the pro	perty	in	the	Ready	Reckon	er is
Rs.53,000/-	per sq.	metre.		The	constr	uction	cost
according	to the plaintif	fs	will	have	to	be	assumed
at	Rs.1000/- per sq	.ft.		The	plaintiff	in	addition
relied	on the valuatio	n	report	which	is	Exhibit	N
to th	e plaint to	butr	ess	this	subm	ission.	In
addition,	reliance is	pl	aced	on	the	doc	ument/sale

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instance of properties in the vicinity which is

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around Rs.6531/- to Rs.7,387/- per sq.ft.

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According to the defendants, there is fallacy
in the argument of the plaintiffs that the
depreciation to be provided on the valuation given
by the Ready Reckoner should be on the construction

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cost	of	Rs.100	0/- per sq.m	etre. Whereas, the
deprecia	tion	should	be on	the entire valuation
amount		specified	in the Ready	Reckoner. Reliance
is	placed	by	the defendants on	guideline 4 of the
Ready		Reckoner	to support their	submission. It is
the	case	of the	defendants that	the monthly rent in
respect		of the	disputed premises	in no case shall

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exceed Rs.3,127/- p.m. , as calculated in

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computation Exhibit 5 at page 45.

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5.	Having	consi	dered the	rival submissions,	there
is substance		in the	grievance of	both the	sides
that the Co	urt	Receiver	has not	indicated the	basis
on which	he	has as	sumed the val	uation of the	suit
property at		Rs.6,50,0	00/- or for	that matter	the
depreciation at	the	rate	of 20 %.	By no	standards,
figure of	Rs.	6,50,000/-	is in	accord with	the
assumed valu	ation	in	respect of	the property	as
provided in	the	Ready	Reckoner.	At the same	time,
there can	be	no	difficulty	in accepting	the
approach of		the	Court Receiver	that valuation	of

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the property can be founded on the rates specified

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in the Ready Reckoner.

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6.	In	the	present case, it	is not	in	dispute	that
the	building	is	old building.	The	age	of	the
building	is		stated to be	over	75		years.
According	ly,	if	we were to	invoke	valuation	of	the
building	provi	ded	under the Rea	dy Re	ckoner,	it	will
be	at	the	rate of Rs.53,000/-	per.sq.m	etre.		That

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means,	for th	e prem	ises	admeas	uring 19	8 sq.ft built
up (	165 sq	.ft c	arpet	area)	valuation	would be
Rs.9,26,440/-	.	In	deed,	this	valuation	is notional
valuation	for	the p	urpo	ses of	paying	stamp duty on
the	agreement.	P	oint	4 ho	wever, fu	rther provides
that	depreciation	rates		should	be	provided in
respect	of	old	build	ings.	Different	depreciation
rates	are	provided		in	respect	of buildings
depending	upon	the	age	of the	building.	If the
building	is	above	40	years,	the dep	reciation to be
provided	is	specified		at 50	%.	If this
depreciation	at	the rat	e	of 50	% is	to be provided

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in that case, valuation of the suit premises will

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have to be assumed as Rs.4,63,220/-.

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7.		However, counsel for	the	pl	aintiffs	would	argue
that	the	depreciation will	have	to	be	provided	only
on	the	construction cost	and	not	on	the	entire
property.		He further	subm	its	that	c	onstruction
cost	in	respect of the	building	will	have	to	be
assumed		as Rs.1000/-sq.ft.	To	su	pport	the	argument
that	c	onstruction cost will	have	to	be	assumed	at
Rs.1000/-		per.sq.ft, reliance	is	placed	on	item	no.
9	of	the guidelines to	be	read	along	with	item
no.7.		On the other	ha	nd,	counsel	for	the

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defendants placed reliance on point (i) below item

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no.4 of the guidelines which reads as follows :

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"	While	valuing	old property	if	valuation
arrived	after	allowing	depreciation	is	less
than	the de	veloped	land v	alue,	then
valuation	should be	done	as per	point	no.7."
(Land	plus		construction		cost.)

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Both arguments	will	have to be di	scarded on	the
reasoning that	the	Court Receiver was	not	called
upon to decide	the	stamp duty pay	able on	the
property, but to	deter	mine the royalty	amount	which
will be just	and	reasonable. As	is me	ntioned
earlier, the buil	ding	is very old about	75	years.
If so, the	royalty	rate determined by	the	Court
Receiver in the	sum	of Rs.4,900/- per	month for	an
accommodation (one	ro	om admeasuring	165	sq.ft
carpet area)	in	my opinion,	warrants	no
interference, on	such	technical argument.	As	the
amount decided by	the	Court Receiver c	annot be	said
to be either	excessive	or grossly ina	dequate, it	is
not necessary	for	this court to r	e-consider	that
rate of royalt	y.	Indeed, Court	Receiver	while
determining the	roya	lty amount has to	apply	some
norms and principles	.	But, that does	not mean	that
the amount	arrived	at by him	should	have

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arithmetical exactitude which is the attempt of

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both the counsel.

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I	am	incli	ned	to upho	ld	the	royalty	amount
determined	by	the	Cou	rt Receiv	er	as	I find that	the
same is	just	as	it	is betw	een	the	two extreme	views
projeccted		by	the	parties.F	or,	if	the cal	culation
given	by	the	pla	intiffs w	ere	to	be considered,	the
amount	will	be		around		Rs.9,653	/-, whereas	if
calculation	giv	en	by	the	defe	ndants	were to	be
accepted,	th	e am	ount	will	work	out	to Rs	.3,127/-.
Since	the	amount		determined	by	the	Court	Receiver

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is almost in between both these amounts

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and having

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regard to thefact that the building is as old as 75

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years, it is not a case of gross over-valuing or undervaluing the royalty amount. It cannot be overlookedthat neither party has produced or invited my attention to any material to establish

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the prevailing market compensation of comparable

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premises. Besides, this amount is only tentative ;

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as, if the plaintiff succeeds in the suit, he

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would get relief of appropriate amount of mesne profits and if the defendants were to succeed in that case they may not be liable to pay any amount exceeding Rs.250/p.m. towards rent. All those issues will have to be decided in the suit on its own merits. That being so, merely because there is some error here or there, that alone need not be the basis for interference by this Court in

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relation to the order passed by the Court Receiver

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determining the royalty amount.

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8. In the circumstances, both the Chamber Summons

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are dismissed.

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9.	Consequently,	order	of	the	Court	Receiver
determining	royalty	amount	in	the	sum	of
Rs.4900/-p.m.	in respect of the sui	t premises is

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upheld.

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10.	Since		the ch	allenge of	the		defendants	with
regard	to	the	royalty	amount	has	been	rejected	by

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this order in the interest of justice the
defendants are given four weeks time from today to
pay the same, failing which Court Receiver shall
proceed to take physical possession of the suit
premises forthwith without inviting further
directions from this court. It is recorded that
time to deposit the outstanding royalty amount has
been granted on the request of the defendants and
the defendants through counsel have assured that
the entire amount as determined by the Court
Receiver will be deposited within 4 weeks from
today unconditionally. The defendant no.1 is

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personally present in court and agrees to abide by this order.

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(A.M.Khanwilkar, J)

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Tarla N. Morjaria and Ors. v. Bipin Hiralal Shah and Anr.

Case brief

What is this about?

What did the court decide?

Tarla N. Morjaria and Ors. v. Bipin Hiralal Shah and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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Coram

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