Nawal Sultania & Ors vs Hemant Kumar Chabria & Anr on 3 February, 2023

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Calcutta High Court (Appellete Side)

Nawal Sultania & Ors vs Hemant Kumar Chabria & Anr on 3 February, 2023

1. This is an application for stay of operation of the judgment and decree dated September 30, 2020, whereby Title Suit No. 134 of 2016 was decreed on contest by the learned Civil Judge (Senior Division), Sealdah, South 24- Parganas. The defendants were directed to deliver vacant peaceful possession of the suit property to the plaintiffs within 4 months from the date of the decree, failing which the plaintiffs were granted liberty to execute the decree. The plaintiffs were further given liberty to initiate separate proceedings under Order 20 Rule 12 of the Code of Civil Procedure for determination of mesne profits.

2. The defendants have come up in appeal and have filed the present application for stay of operation of the decree.

3. The appellants argued that they got possession of the land in question under an agreement of lease although the same may have been described as a license agreement. Nomenclature is irrelevant. The substance of the agreement and the nature and character of possession has to be taken into account to decide whether the person in occupation/possession is a tenant or a licensee.

4. We will consider the aforesaid point at the hearing of the appeal. The only question now is whether we should allow the stay application and if so, on what terms, if any.

5. Having heard learned Counsel for the parties, we are of the view that the appellants have raised a substantial question of law which needs to be decided. However, we are told that the appellants have not paid any rent/license fee/occupational charges to the respondents for a very long time. Hence, we are inclined to put the appellants on terms as a pre-condition for stay of operation of the decree in question.

6. According to the respondents/decree holders/plaintiffs, and as per the case pleaded in the plaint, the land in question, measuring about 13 Cottahs 5 Chittacks is comprised in Premises No. 9/2, Topsia Road (South), Kolkata. Mr. Ashok Kumar Banerjee, learned Senior Advocate appearing for the respondents made the following submissions;-

(i) Mr. Banerjee drew our attention to a document at page 71 of the paper book which is a photocopy copy of a document described as "DEED OF LEAVE AND LICENCE" dated September 6, 2007, executed by and between the plaintiffs and the Defendant No. 1. In particular, our attention was drawn to Clause 12 of that document which reads as follows:-

"12.After the expiry of the agreement (i.e. 24 months) if the Licensee shall fail to vacate the said premises in that event in addition to such other right which the Licensor may have against Licensee, the Licensor shall be entitled to and the Licensee agrees to pay the Licensor to damages at the rate of Rs. 7500/- Only (seven Thousand 4 five hundred) per day, as and by way of predetermined liquidated damages till the peaceful."

Obviously the words "vacant possession of the said premises is made over to the Licensor", have been not printed by mistake.

Learned Senior Counsel submitted that the parties themselves stipulated in the agreement, pre-determined liquidated damages in the event of failure on the part of the defendants to vacate the suit premises upon expiry of the license agreement which was for 24 months. Hence, the defendants should pay occupational charges at the rate indicated in clause 12 of the agreement till the disposal of the appeal as a pre-condition for stay of operation of the decree of eviction.

(ii) Learned Senior Counsel submitted that the land is situated in a prime commercial area. He relied on a report captioned "CALCULATION OF PRESENT FAIR MONTHLY OCCUPANCY CHARGES BASED UPON CURRENT MARKET VALUATION", dated November 8, 2022, prepared by one Sri Banibrata Mukherjee, Chartered Engineer. In the said report, the Engineer, Commissioner and valuer has adopted 2 alternative methods for arriving at the fair monthly occupational charges. The first is the "Annual equivalent of income method from circle rate". Following this method, the valuer has arrived at a fair monthly rent of Rs. 4,68,721.46/- from the month of November, 2022. The other method followed is "market driven method of occupancy charges." Following this method, the valuer has arrived at a monthly occupancy charge 5 of Rs. 4,85,093.35/-. Learned Senior Counsel submitted that fair monthly occupational charges to be paid by the defendants should be fixed somewhere in the region indicated by Shri Mukheree in the aforesaid report.

(ii) Mr. Banerjee then said that another tenant by the name of 'Karukrit' is paying Rs. 93000/- per month only for the purpose of putting up hoardings on the self same suit property. This would also give an indication as to how valuable the suit property is.

(iv) He then submitted that a licensee is not in a privileged position like a tenant. Under the law of the State, a tenant, even after the contractual tenancy comes to an end by whatever means, enjoys protection as a statutory tenant and enjoys such status till a competent Court passes a decree of eviction against him. A licensee has no such protection. The defendants, as licensees, whose license stood expired by efflux of time in 2009, should be directed to pay occupational charges at the current market rate from the date of expiry of license.

(v) Mr. Banerjee then drew our attention to paragraph 9 of the plaint which reads as follows:-

"9. That since the defendant No. 1 failed and neglected to comply with the said promise the plaintiff by a courtesy notice dated 16/09/2009 sent by speed post, asked the defendant No. 1 to vacate and deliver khas possession of the suit property to the plaintiffs with a threat to exercise the penal Clause No. 12 of the said agreement dated 6 06/09/2007 wherein it was specifically stipulated that if the defendant would fail to vacate the property - the plaintiff would be entitled and the defendant also agreed and liable to pay damages @ Rs. 7500/- per day to the plaintiff till the date of delivery of peaceful possession thereof BUT the defendant No. 1 despite receiving the said notice failed and neglected to deliver of possession of the suit property to the plaintiffs and in fact the defendant No. 1 have kept himself mum.

The Xerox Copy of the said notice dated 16/09/2009 and Xerox copy of Acknowledgement are enclosed herewith."

He then showed us paragraph 17 of the written statement which reads as follows:-

"17. With regard to the statements made in paragraph 9 of the said plaint the defendants deny and dispute all other statements which are contrary to the said records. The defendants state that suddenly on 16th September 2009 the defendants received by post a letter from the plaintiffs stating that after expiry of the last agreement the defendants should quit the premises. In the said notice nothing has been alleged about the violation of any of the covenant of the said agreement."

Mr. Banerjee submitted that there is no specific denial by the defendants of the case pleaded in paragraph 9 of the plaint.

(vi) Mr. Banerjee then submitted that the plaintiffs are paying property tax of approximately Rs. 1,00,000/- annually. The defendants cannot insist that they will pay occupational charges at the agreed rate of Rs. 80,000/- per annum as indicated in the license agreement.

(vii) Learned Senior Counsel relied on the following three decisions of the Hon'ble Supreme Court:-

(i) State of Maharashtra & Anr. v. M/s. Super Max International Private Limited & Ors., reported at (2009) 9 SCC 772.

(ii) Martin & Harris Private Limited & Anr. v. Rajendra Mehta & Ors., reported at (2022) 8 SCC 527.

(iii) Atma Ram Properties (p) Ltd. v. Federal Motors (P) Ltd., reported at (2005) 1 SCC 705.

Learned Senior Counsel relied on the aforesaid decisions in support of the proposition that once a decree of eviction is passed against a tenant, the contract of tenancy comes to an end and it is irrelevant as to what rent is mentioned in the contract of tenancy / lease. After the tenant has suffered an eviction decree, he is liable to pay occupancy charges/mesne profits which need not be at the rate mentioned in the tenancy contract and can be at a much higher rate to be determined by the Court on a consideration of various factors including location of the land in question, extent of built up area, nature and character of the land, etc. 8

7. Mr. Anindya Kumar Mitra, learned Senior Advocate appearing for the appellant submitted that the appellants have been in occupation of the suit premises since 1997. The first agreement between the parties was dated September 20, 1997. The annual rent mentioned in such agreement was Rs. 25,000/-. Subsequently agreements were executed on September 1, 1999, September 1, 2001, September 10, 2003, September 9, 2005 and September 6, 2007. From time to time the annual rent was increased from Rs. 25,000/- to Rs. 80,000/- as mentioned in the said agreement.

8. Mr. Mitra relied on a report prepared by one Shri. Prabir Kumar Chowdhury, Chartered Engineer and Paneled Valuer and Surveyor of this Court, wherein, the author of the report has assessed the fair market rent for the suit premises as in the year 2022. By following the Rent Escalation Method, Shri Chowdhury has assessed the monthly rent payable by the appellants for the year 2022 at Rs. 26,907/-. Following an alternative method for fixing fair rent by taking into account comparable rents for commercial units in the vicinity of the suit premises, the Engineer arrived at a figure of Rs. 37, 440/- per month. Taking the arithmetic mean of the two figures arrived at by following two different methods, the Engineer arrived at the figure of Rs. 32,174/- per month as the fair rent for the suit premises.

9. Mr. Mitra submitted that Shri. Chowdhury, while preparing his report has considered all relevant factors including the following:-

"(a) Area is low land, at least 10 ft below the road level. 9

(b) Common entrance of 15 ft shared by both Sultania Marbles and WB fishery.

(c) Located adjacent to water body, thus chance of water logging any time of the year.

(d) Massive hoarding inside the premises, hence the chances of accident and hazard are evident.

(e) The hoarding on the said land is a big obstruction and is of no use to Sultania Marbles.

(f) Garbage dumping yard has also become a regular thing, creating pollution hazard.

(g) No drainage and no pakka structure, except 800 Sq.ft. semi-

permanent shed, constructed by our client is available for business purpose."

10. As regards the figure of Rs. 7500/- per day mentioned in the agreement between the parties as representing pre-estimated liquidated damages, Mr. Mitra referred to Prayer A of the plaint which reads as follows:-

"A. For a declaration that the defendants are liable to pay compensation @ Rs. 7500/- per day after expiry of the period of license by efflux of time from 7th September 2009 in terms of Clause no. 12 of the Agreement dated 6th September, 2007 till the delivery of vacant possession of the suit property to the plaintiffs." 10

11. Learned Senior Counsel submitted that this prayer has not been granted by the learned Trial Court. Since the prayer has been rejected, the respondent cannot rely on Clause 12 of the agreement any further.

12. Mr. Mitra further submitted that the respondent has obtained valuation from the Directorate of Registration by feeding incorrect data into the system. The Valuer's report relied upon by the respondent is wholly unreliable and also irrelevant for the purpose of assessing fair rent. The report could have been relevant if the property in question was being sold.

13. We have considered the rival contentions of the parties.

14. In the decree which is under appeal, the learned Trial Judge has granted liberty to the respondents / plaintiffs / decree-holders to initiate proceedings for ascertaining mesne profits. We are told that such proceedings have been initiated.

15. We are presently not concerned with the proceedings for mesne profits. We are required to determine an amount which the appellants shall pay to the respondent for the period from the date of the decree under appeal till the date of disposal of the appeal.

16. We do not wish to rely upon either of the two valuation reports filed by the parties respectively. In our opinion, while the report relied upon by the appellants has arrived at a figure representing fair rent which according to us is unrealistically low, the figure arrived at by the learned Engineer engaged by 11 the respondent is artificially high. There is no doubt that the area wherein the suit premises is situate, is developing fast and a lot of commercial activities are carried on in that area. However, still that area cannot be said to be the commercial hub of Calcutta. In our view, the fair market rent/occupational charge should be somewhere in between the two figures suggested by the two chartered engineers engaged by the parties respectively.

17. It is of considerable significance that Clause 12 of the agreement dated September 6, 2007, executed by and between the parties, was consciously incorporated in the agreement. Both the parties to the agreement are commercial people. They agreed on a figure of Rs. 7,500/- per day as representing pre-determined liquidated damages in case of failure of the appellants herein to hand over vacant possession of the suit premises to the respondents upon expiry of the agreement by efflux of time. Rs.7500/- per day comes to Rs. 2,25,000/- per month (30 days). While we are conscious that under Section 74 of the Contract Act, a clause which is in the nature of a penalty clause will not be enforced, an agreed figure mentioned as predetermined liquidated damages, may be taken as the upper limit for assessing occupational charges. 50% of the aforesaid figure of Rs. 2,25,000/- comes to 112,500/-. Reducing that figure still further, in our opinion, a sum of Rs. 1,00,000/- per month would be the fair market rent for the suit premises for the period from the date of the decree till the date of disposal of the appeal. 12

18. We have a fair idea about the locality in question. We also take into account the fact that in paragraph 4 of the plaint, it is stated as follows:-

"4. That the plaintiffs, considering that the said property was under

process of mutation and amalgamation, on good faith and on believing and trusting such assurance and repeated representations of the defendant No. 1 and his brother Ashok Sultania to be true and honest, subject to certain terms, conditions, restrictions and also subject to the occupation of another occupier namely KARUKRIT advertising Pvt. Ltd. with having existence of these plaintiffs' Hoarding / Boards etc. covering more than 50% area of land, had allowed the defendant no. 1 and his brother Ashok Sultania to occupy the suit property, as is where is basis, more fully described in the First Schedule herein below, as licensees on 20th September 1997 for a temporary period of two years, with effect from 1st day of September 1997 to 31st August 1999 under a written agreement on leave and license reducing the terms, conditions and restrictions as imposed in writing with annexing a sketch plan separately showing and depicting the land with three rooms including the structures of Hoarding etc., covering under one boundary wall having one entrance gate, but without giving them any exclusive possession thereof, on payment of occupation charges of Rs. 1,25,000/- (Rupee One Lakh Twenty-five thousand) only payable annually in advance as per English Calendar in the manner mentioned hereinafter." 13

Hence it appears that a portion of the suit premises is being utilized by the said Karukrit. We have also noted that Karukrit is paying rent in the sum of Rs. 93,000/- to the respondents.

19. In view of the aforesaid, we stay the operation of the judgment and decree under appeal till the disposal of the appeal subject to the appellant depositing with the Registrar General of this Court occupational charges at the rate of Rs. 1,00,000/-per month from the date of the decree till date. There will be an unconditional stay of the decree appealed against for a period of 10 days from date. The order of stay shall continue till the disposal of the appeal in the event the appellant deposits the aforesaid amount with the Registrar General of this Court within 10 days from date and subject to the appellants continuing to deposit Rs. 1,00,000/- per month, with the Registrar General, from date till the disposal of the appeal. The amount for the period from the date of the decree under appeal till date, as indicated above, if deposited, will be invested by the Registrar General in a Short Term Fixed Deposit Account with a Scheduled bank offering the highest rate of interest, subject to further orders of this Court. Any further amount, if deposited by the appellants in terms of this order, shall be invested by the Registrar General in a recurring Fixed Deposit Account with the same Scheduled Bank, subject to further orders of this Court. In default of depositing the amount indicated for the period from the date of the decree till date, the order of stay shall automatically stand vacated after expiry of ten days from date. Similarly, in default of depositing occupational charges per 14 month for the future period till disposal of the appeal, as indicated above, the interim order of stay shall stand vacated automatically.

20. The stay application being IA No: CAN/1/2022 is disposed of. Let the appeal be listed for hearing on 15.02.2023.

21. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all the requisite formalities.

I agree.

(Apurba Sinha Ray, J.)                                       (Arijit Banerjee, J.)

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Calcutta High Court (Appellete Side)