New India Assurance Company Limited vs Tara Devi Wife Of Late Tirloki Nath Gupta ... on 26 March, 2012

[Cites 8, Cited by 11]

Punjab-Haryana High Court

New India Assurance Company Limited vs Tara Devi Wife Of Late Tirloki Nath Gupta ... on 26 March, 2012

1. The present revision petition by the tenant is directed against the order of the Appellate Authority, Chandigarh which has, while staying the operation of the ejectment order passed against the tenant, directed it to pay mesne profits @ Rs.75,000 per month regarding the premises in question, i.e. SCO No.347-348, Sector 35-B, Chandigarh on the 1st floor.

2. The landlord filed ejectment application on 16.11.2009 taking the plea that the 1st floor was taken on rent vide lease agreement dated 15.11.2006 at a monthly rent of Rs.16,500/- per month for a period of 3 years and the landlord was not interested in continuing the tenancy after 07.11.2009 as the premises were required by petitioner No.3 for the business of setting up a hotel. The said ejectment application was allowed on 07.09.2011 by the Rent Controller, Chandigarh and the tenant was directed to hand-over the vacant possession within a period of 2 months. An appeal was preferred by the tenant-petitioner before the Appellate Authority, Chandigarh in which the landlord filed an application for grant of mesne profits claiming that rent for a similar premise bearing SCO No.335- 336, Sector 35-B, Chandigarh was Rs.2.5 lacs per month for the entire 1st CR No.1617 of 2012 2 floor and also attached lease deeds in respect of the 1st and 2nd floor pertaining to the said shop-cum-office whereby the rate of rent was Rs.4 lacs per month with 15% increase after 3 years and it was contended that the petitioner was in possession of the 1st floor, and therefore, he should be directed to pay mesne profits @ Rs.2.5 lacs.

3. In the reply filed by the Insurance Company, it was pleaded that the premises were taken in the year 1984 and the last lease deed was executed on 15.11.2006 and the rate of rent was Rs.16,500/- per month and the tenancy was to continue for another term of 3 years subject to the same conditions with an increase of 20%. In the reply, it was also pleaded that M/s United India Insurance Company Limited was occupying SCO No.357- 358, 1st floor, Sector 35-B, Chandigarh and the rate of rent was Rs.9,097/- per month and the owner had agreed now to accept rent of Rs.21,200/- per month. Similarly, M/s National Insurance Company Limited was occupying SCO No.305-306, 1st floor, Sector 35-B, Chandigarh and was paying rent @ Rs.12,001/- per month. In the same area, M/s National Insurance Company was also having an office in SCO No.339-340, Sector 35-B, Chandigarh and the rate of rent was Rs.66,125/- per month for the 1st and 2nd floor. Reference was also made to the petitioner-company occupying SCO No.36- 37, Sector 17-A, Chandigarh and as per a fresh lease deed executed on 29.03.2011, the rate of rent was Rs.35/- per square feet which consisted of basement, ground-floor and 3 other floors and the total carpet area was 3500 square feet. The Appellate Authority, Chandigarh, accordingly, taking into account the fact that lease deed relied upon by the respondent-landlord was dated 04.09.2009 and for SCO No.335-336, Sector 35-B, Chandigarh and the built-up area was about 4600 square feet and the rent was Rs.4 lacs and CR No.1617 of 2012 3 thus the rent came to Rs.89/- per square feet per month and accordingly, taking into consideration that the area in question was 1906 square feet and if the rate of rent is calculated at the rate of Rs.89/- per square feet, it would come to Rs.1,69,634/- per month and also that the petitioner-Company was occupying the premises since 1984 and the last lease deed had been executed on 15.11.2006, assessed the mesne profits at Rs.75,000/- per month. Accordingly, the tenant was directed to deposit the same with the Rent Controller, Chandigarh from the date of the ejectment and within 2 months from passing of the order and thereafter also, the tenant was liable to pay the mesne profits by 15th of each succeeding month starting from 15.04.2012 and in addition, also to pay the arrears of rent, if any, @ Rs.16,000/- per month during the pendency of the appeal. The amount of mesne profits deposited was not to be released in favour of the landlord till the decision of the appeal except the amount of rent and the balance of the amount was to be paid to the person in favour of whom the appeal is to be decided and accordingly, conditional stay was granted subject to the deposit. Resultantly, the present revision petition has been filed.

4. Submission of the counsel for the petitioner is that the last lease deed is dated 15.11.2006 and the rate of rent was fixed at Rs.16,500/- and there was an increase clause of 15% permitted. The petitioner-tenant was willing to increase the said amount and the rent which had been fixed by the Appellate Authority, Chandigarh was on a very higher side and there was a quantum jump in the rate of rent which had to be paid every month. The said submission cannot be accepted since it is now settled by the Hon'ble Supreme Court that after the order of ejectment, the contractual rate of rent comes to an end and the landlord is not bound by the contractual rate. The CR No.1617 of 2012 4 conclusions summed up by the Hon'ble Supreme Court in M/s Atma Ram Properties Private Ltd. Vs. M/s Federal Motors Private Ltd. 2003 PLR 4643 reads as under:

"18. To sum up, our conclusions are:-

(1) while passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure, 1908, the appellate Court does have jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed and in so far as those proceedings are concerned. Such terms, needless to say, shall be reasonable; (2) in case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of tenant contained in clause (l) of Section 2 of the Act, the tenancy does not stand terminated merely by its termination under the general law; it terminates with the passing of the decree for eviction. With effect from that date, the tenant is liable to pay mesne profits or compensation for use and occupation of the premises at the same rate at which the landlord would have been able to let out the premises and earn rent if the tenant would have vacated the premises. The landlord is not bound by the contractual rate of rent effective for the period preceding the date of the decree; (3) the doctrine of merger does not have the effect of postponing the date of termination of tenancy merely because the decree of eviction stands merged in the decree passed by the superior forum at a latter date."

5. This view was followed in Anderson Wrights & Company Vs. Amar Nath Roy 2005 (3) PLR 666, the relevant portion of the same reads as under:

"5. As held by this Court in Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. , once a decree for eviction has been passed, in the event of execution of decree for eviction being CR No.1617 of 2012 5 stayed, the appellants can be put on such reasonable terms, as would in the opinion of the appellate court reasonably compensate the decree holder for loss occasioned by delay in execution of the decree by the grant of stay in the event of the appeal being dismissed. It has also been held that with effect from the date of decree of eviction, the tenant is liable to pay mesne profits or compensation for use and occupation of the premises at the same rate at which the landlord would have been able to let out the premises on being vacated by the tenant. While determining the quantum of the amount so receivable by the landlord, the landlord is not bound by the contractual rate of rent which was prevalent prior to the date of decree."

6. Thereafter, again, in State of Maharastra Vs. Supermax International Private Ltd. 2009 (9) SCC 772, the Hon'ble Apex Court held that the fixation of mesne profits has to be on some basis and cannot be on the whims and fancies. Paragraph 77 of the same reads as under:

"77. In the light of the discussions made above we hold that in an appeal or revision preferred by an tenant against an order or decree of an eviction passed under the Rent Act it is open to the appellate or the Revisional Court to stay the execution of the order or the decree on terms, including a direction to pay monthly rent at a rate higher than the contractual rent. Needless to say that in fixing the amount subject to payment of which the execution of the order/decree is stayed, the Court would exercise restraint and would not fix any excessive, fanciful or punitive amount."

7. Keeping this principle laid down in M/s. Atma Ram Properties Pvt. Ltd. case (supra) and Anderson Wrights & Company (Supra) in mind, this Court in Surinder Kumar Vs. Rattan Lal 2006 (2) PLR 200 has held that registered lease deeds are good tool-bars and provide a relevant parameter to find-out what is the existing rent on the basis of which the mesne profits can be fixed, relevant paragraph of the judgment reads as CR No.1617 of 2012 6 under:

"9. The other question that requires consideration is the mode of determination of the mesne profits or compensation payable. In this respect, it is appropriate to note that the same is to be done on the basis of materials placed on record by the parties. The parties would be at liberty to place cogent evidence by way of recent registered lease deeds of the locality to show their amount of rent which is payable. It is on the basis of such convincing material that a provisional assessment of the compensation/damages which the tenant is liable to pay the landlord pending his appeal or revision against an order of ejectment, can be determined. This provisional assessment that has been made would be subject to adjudication at the time of final disposal of the appeal or revision as the case may be. If the final adjudication by the appellate or revisional Court in respect of the damages or compensation payable by the tenant is at variance with the provisional order, the landlord would be liable to reimburse or refund the excess amount deposited by the tenant and in case of deficient deposit, the tenant shall be liable to make good the deficient amount. In fact in Atma Ram Properties case (supra), the Hon'ble Supreme Court held that reversal of interim orders passed at the interim stage due to final decision going against the party securing the interim order in its favour would entitle the successful party to demand (a) restitution of benefit earned by the opposite party under the interim orders or

(b) compensation for what it has lost."

8. The order of the Appellate Authority, Chandigarh is, thus, to be examined in the context of the principles which have been laid down by the Hon'ble Apex Court and by this Court as noticed above. The lease deed, Annexure P9 relied upon by the tenant is dated 11.10.2005 and pertains to SCO No.337-338, Sector 35-B, Chandigarh which has been leased out to National Insurance Company Limited. The Company was already in CR No.1617 of 2012 7 occupation of the 1st floor and 2nd floor earlier since 11.06.1985 and thereafter, the lease had been extended from 01.01.2003 for a period of 9 years till 31.12.2012 @ Rs.50,000/- per month for the first 3 years, @ Rs.57,000/- per month for the second 3 years and @ Rs.66,125/- per month for the third 3 years. Therefore, for the 1st and 2nd floor, the said Company was paying Rs.66,125/- per month for the last 3 years and the premises had already been in their possession since 1984. The lease deed Exhibit P10, dated 29.03.2011 cannot be taken into account at all since it pertains to Sector 17-A, Chandigarh and the rate of rent therein is totally different since it is the main shopping centre and main market. The Company has also placed on record report of its own surveyor and investigators as Annexure P5 which was also referred to in the reply filed to the application for grant of mesne profits in which there is reference to the investigator reporting that the rate of rent was between Rs.80/- to Rs.85/- per square feet and that M/s Kotak Mahindra Bank on the ground floor was paying Rs.3.85 lacs per month for the area of Rs.1700 square feet for ground floor of SCO No.335- 336, Sector 35-B, Chandigarh. The Appellate Authority has placed reliance upon the lease deed dated 04.09.2009 which pertains to SCO No.335-336 and calculated the rate of rent @ Rs.89/- per square feet. Accordingly, after taking into consideration that the premises are very similarly situated and the location of the tenanted premises is the same and the nature of accommodation is also similar, the Appellate Authority has fixed Rs.75,000/- as mesne profits which works out to Rs.40/- per square feet since the area in occupation is 1906 square feet. The Appellate Authority has noticed that if the rate of rent is calculated at Rs.89/- per square feet, it would come to Rs.1,64,034/- per month and has kept in mind that the CR No.1617 of 2012 8 tenancy has been running from 1984 and thus, reduced the rent by more than 50%. The reasoning adopted by the Appellate Authority cannot be held to be violative of the principles laid down by this Court. The interest of the tenant is also protected by directing that the amount shall be deposited with the Rent Controller but should not be released to the landlord and only the rent portion of Rs.16,500/- shall be released.

9. Thus, no fault can be found with the reasoning adopted by the Appellate Authority and the order directing the tenant to deposit the said amount is accordingly, up-held. However, since the amount was to be deposited within 2 months from 09.02.2012, the time for complying with the order is extended till 30.04.2012 and all the other conditions shall remain the same as directed by the Appellate Authority.

10. Accordingly, the present revision petition is dismissed in limine.




26.03.2012                                         (G.S.SANDHAWALIA)
sailesh                                                  JUDGE

Unlock Advanced Research with PRISMAI

Punjab-Haryana High Court