PATHLKANA, J.— 2-arook v. Sachiianandam
Present: Patkirana, J., Vythialingam, J., and
S. M. M. ZAROOK, Petitionerand
SACHITANANDAM and four others, Respondents.S. C. Application No. 1138/74
Rent Act No. 7 of 1972, section 4(1)—Application to Rent Board to fixauthorized rent—Assessment in force during November 1941. inrespect of the premises as residential premises—Premises there-after assessed in 1968 as business premises—Which is the firstassessment for purpose of fixing the authorized rent—Decision ofBoard of Review—Error of haw—Writ of Certiorari.
Where certain premises the annual value of which had beenassessed on the basis that they were residential premises daringthe month of November, 1941 had thereafter been assessed for thefirst time as business premises in the year 1968, the question arose asto which assessment was to be taken as the “ first assessment ”referred to in section 4(1) (a) of Rent Act, No. 7 of 1972, for thepurpose of determining the authorized rent.
Held •' That the assessment of the premises in question as businesspremises was made for the first time after November 1941. Theannual value of the premises in order to fix the authorized rentshould therefore be the amount of such annual value as specifiedin the first assessment of the premises as business premises whichwas in 1968.
June 17, 1976. Pathiraka, J.
This is an application by the petitioner, the landlord, to quashthe determination of the Board of Review fixing the authorizedrent of the premises in question as residential premises in anappeal to it from the decision of the Rent Board which fixedthe authorized rent of the premises as business premises on thebasis of the annual value in 1968.
The question for decision in this case is whether the annualvalue for the purpose of calculating the standard rent undersection 4(1J of the Rent Act, No. 7 of 1972, in respect of the
A. PPLICATION for a Writ of Certiorari.Nimal Senanayake, for the petitioner.
A. Sivagurunathan, for the 5th respondent.
Cur. adv. vult.
PATH. IK ANA, J,—Zarook v. Sachitanandam
premises in question, which are business premises, should bethe annual value of the premises as specified in the assessmentin force during the month of January, 1968 or the annual valueof such premises as specified in the assessment .in force duringthe month of November 1941. It is common ground that theannual value of the premises does not exceed itie relevantamount as defined in section 48 of the Act.
The petitioner is the landlord of the premises No. 109, Ambe-gamuwa Road, Nawalapitiya of which the 5th respondent is thetenant. The premises are described as a “ tiled Dispensary andcompound ”. The 5th respondent who is an indigenous medicalpractitioner resides and runs a dispensary called the “ ModemDispensary ” in the said premises. The 1st respondent is theChairman of the Board of Review, and the 2nd to 4tfi respondentsare Members of the said Board.
The 5th respondent, the tenant, made an application to theRent Board, Nawalapitiya, seeking inter alia a determination ofthe authorized rent of the premises in question. The Rent Boardby its order dated 11.9.73, in dealing with the question whetherthe premises were to be treated as residential premises or busi-ness premises came to the conclusion on the Assessment TaxReceipt and other evidence that the premises in question werebusiness premises since 1968, althougn the premises had origi-nally been assessed as residential premises. The Rent Boardheld that the premises were first assesed as business premisesin 1968 and therefore adopted the 1968 annual value of ttiepremises and determined the authorized rent at Rs. 61 permonth.
The 5th respondent, the tenant, appealed to the Board ofReview of which the 1st respondent was the Chairman and the2-4 respondents members thereof. Before the Board of Reviewboth parties admitted that the premises were business premises.The 5th respondent took up the position that the 1968 assessmentof the premises as business premises by the Rent Board wasincorrect and that the assessment should be based on the 1941annual value of the premises for the purpose of determiningthe authorized rent of the premises. The argument put forwardon behalf of the landlord, the petitioner, was that the assessmentof the premises in 1941 was done when it was residential premisesand in view of the fact that the assessment of the annual valueof the premises as business premises was made for the first timeafter November 1941 the amount of the annual value must becalculated in relation to the first assessment in 1968 of the saidpremises as business premises.
The 5th respondent countered this argument by submittingthat even if the premises were business premised the annual
PATHTRANA, J— Zarook v. Sacfiiianandon*
value must be determined in relation to the 1941 assessment asthe reference to “first assessment” in section 4(1) (a) in thewords—
“ The amount of such annual value as specified in suchfirst assessment, ”
was the year 1941. The Act was only concerned with the firstassessment and the change of character of the premises after thatdate was immaterial. By its order dated 21.10.74, the Board ofReview despite the admission of the parties and the finding ofthe Rent Board that the premises were business premises revers-ed the finding of the Rent Board and held that the premiseswere residential premises as it was mainly occupied for residen-tial purposes although the name-board “ Modem Dispensary ”was exhibited outside the premises. The mere entry of the word“ Dispensary ” in the Assessment Register, according to theBoard of Review, did not make it business premises. The Boardof Review therefore did not think it necessary to go into thequestion whether the standard rent was altered by reason ofthe fact that the premises were converted from residential premi-ses to business premises. As the annual value did not exceed therelevant amount the Board of Review determined the rent inrelation to the amount of the annual value of the premises asspecified in the assessment in force in 1941 and fixed the autho-rized rent at Rs. 26 per month.
There is a definite finding by the Rent Board that the premisesin question are business premises. Further, the parties had beforethe Board of Review admitted that the premises were businesspremises. I
I do not think that in this case the reversal by the Board ofReview of the finding that the premises in question were notbusiness premises but were residential premises, could eitherbe upheld or justified. The decision of the Board of Reviewfixing the authorized rent at Rs. 26 as residential premises onthe basis of the annual value in 1941 cannot be upheld. On thebasis that the premises are business premises on what basisshould the annual value be determined to fix the authorized rent ?
Section 4(1) of the Rent Act which applies to this case readsas follows:
“ Section 4(1) :
The standard rent per annum ofany business
premises the annual value of which does not exceed therelevant amount, means : —
the amount of the annual value of such premises asspecified in the assessment in force during the month of
PATHfRANA, J.—Zarook v- SachUanandatn
November, 1941, or if the assessment of the annual valuesof such premises is made for the first time after that month,the amount of such annual value as specified in such firstassessment….”
The term “ annual value ” is defined in section 48 as follows :
“ In this Act, unless the context otherwise requires—
“ Annual value ” of any premises means the annual valueof such premises assessed as residential or business premi-ses, as the case may be, for the purposes of any rates leviedby any local authority under any written law and as speci-fied in the assessment under such written law, and whereused in relation to the relevant amount, means the annualvalue of the premises as specified in the assessment in forceduring the month of January, 1968, or if the assessment ofthe annual value of the premises is made for the first timeafter that month, the amount of such annual value as specifiedin such first assessment. ”
In my view, the asessment of the annual value of the premisesin question as business premises Was made for the first timeafter November, 1941. Therefore, the assessment of the annualvalue of the premises is the amount of such annual value asspecified in the first assessment of the premises as business premi-ses which was in 1968. Further, the annual value, according tosection 48 in relation to the relevant amount means the annualvalue of the premises as specified in the assessment in forceduring the month of January, 1968. The Rent Board has acceptedthis mode of assessment by taking the annual value of the busi-ness premises in 1968 and fixed the authorized rent for the premi-ses at Rs. 61 per month. I
I am, therefore, of the view that the Board of Review hascommitted an error in law in setting aside the order of the RentBoard and determining the authorized rent of the premises inquestion on the basis of the annual value of the premises asresidential premises as specified in the assessment in force inthe month of November, 1941. The order of the 1st to 4th respon-dents who constituted the Board of Review is therefore quashed.
The petitioner will be entitled to costs fixed at Rs. 52.50 againstthe 5th respondent.
Vythialingam, J.—I agree.
Colin Thome, J.—I agree.
S. M. M. ZAROOK, Petitioner and V. SACHITANANDAM and four others, Respondents_