Rent fixation after upgraded sub-tenancies must follow reasonableness criteria; proviso limiting increase over existing rent does not apply.

In a Section 16(3) proceeding under the West Bengal Premises Tenancy Act, 1956, when sub-tenancies are upgraded the original tenancy is treated as split into separate tenancies for the retained portion and the upgraded sub-tenancies. The Controller must fix rent for each new tenancy by applying the reasonableness criteria in the main part of Section 8(1)(e)-including situation, locality, condition, amenities and comparable rents. The proviso to Section 8(1)(e) does not apply, because there is no existing statutory rent for the newly created premises and the original contractual rent cannot be treated as the rent of the reduced tenancy. The court upheld this approach and rejected apportionment of the original fair rent.

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Issues: Whether, in a proceeding under Section 16(3) of the West Bengal Premises Tenancy Act, 1956, the Controller must fix the rent of the retained portion and the upgraded sub-tenancies by applying Section 8(1)(e), including its proviso, to the original contractual tenancy, or whether the rent is to be fixed for each newly created tenancy on general principles embodied in the main part of Section 8(1)(e) without applying the proviso.

Analysis: Upon upgradation of sub-tenants under Section 16(3), the original tenancy loses its integrity and is replaced by separate tenancies in respect of the retained portion and the sub-let portions. The Controller is required to fix the rent payable for each of these new tenancies, and the rent so fixed is only deemed to be fair rent. The controlling principle is the standard of reasonableness reflected in the main part of Section 8(1)(e), namely, situation, locality, condition, amenities and comparable rents. The proviso to Section 8(1)(e) does not apply, because the new tenancy of the retained portion has no existing rent in the statutory sense and the original contractual rent cannot be treated as the existing rent of the reduced premises. The rent cannot be fixed by first assessing the fair rent of the entire original tenancy and then apportioning it between the tenant and the upgraded sub-tenants.

Conclusion: The proviso to Section 8(1)(e) is inapplicable in a Section 16(3) proceeding of this kind, and the rent fixed for the retained portion on the basis of the main principles of Section 8(1)(e) was in law. The challenge failed and the rule was discharged.

Ratio Decidendi: Where sub-tenancies are upgraded under Section 16(3) and the original tenancy is split into new tenancies, the Controller must fix rent for the newly created premises on the basis of the reasonableness criteria in the main part of Section 8(1)(e), and the proviso limiting increase over existing rent does not apply because there is no existing rent for the new premises.

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