Punjab-Haryana High Court
Bank Of India vs Rakesh Khosla on 16 October, 2014
Author: Rekha Mittal
Bench: Rekha Mittal
RSA No. 5139 of 2011 -1-
In the High Court of Punjab and Haryana at Chandigarh
RSA No. 5139 of 2011 (O&M)
Date of Decision: 16.10.2014
Bank of India
---Appellant
Versus
Rakesh Khosla
---Respondent
Coram: Hon'ble Mrs. Justice Rekha Mittal
***
Present:- Mr. Arvind Kashyap, Advocate
For the appellant
Mr. Saurabh Dalal, Advocate
For the respondent
***
1. Whether Reporters of local papers may be allowed to see
the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the Digest?
REKHA MITTAL, J.
The present regular second appeal has been preferred against the judgment and decree dated 11.8.2011 passed by the Additional District Judge, Rohtak whereby the appeal preferred by respondent-plaintiff Rakesh Khosla against the judgment and decree dated 15.3.2010 passed by the trial court was allowed and the suit of the respondent-plaintiff for recovery of mesne profits has been allowed.
RSA No. 5139 of 2011 -2-
In the year 1982, Bank of India invited applications for hiring accommodation for banking business. In response to the advertisement, the plaintiff offered to give his building/premises. The bank issued offer dated 22.7.1982 which was accepted by the plaintiff. The possession of the premises, on completion of construction, was handed over to the bank on 7.3.1983. There was agreement between the parties with regard to the rate at which the rental was payable by the bank as well as terms and conditions with regard to increase after a stipulated period. Initially, the lease was created for a period of five years which was extended from time to time upto 20 years. As per case of the plaintiff, on 15.11.2002, he informed the bank that he was not interested in extending the period of possession of defendant over the property after completion of 20 years and the premises is required for personal necessity. Another letter dated 5.3.2003 was sent by him calculating damages and mesne profits for illegal use and occupation of premises with effect from 7.3.2003 at Rs. 50,000/- per month with interest at the rate of 18% per annum.
The defendant-appellant filed the written statement admitting most of the facts with regard to creation of lease, fixation of rent and occupation of the premises for a period of about 20 years. However, it is averred that the defendant was occupying the premises as a statutory tenant and sending monthly rent on due dates which the plaintiff was not accepting. It had communicated its decision to vacate the premises subject to availability of alternative accommodation. As possession over the premises by the defendant was in the capacity of statutory tenant, the plaintiff could get it vacated only under the provisions of the Haryana Urban (Control of Rent and Eviction) Act, 1973 (in short "the Act"). It RSA No. 5139 of 2011 -3- denied its liability to pay any damages or interest.
The suit filed by the plaintiff was dismissed by the learned trial court on 15.3.2010. However, the appeal preferred by the plaintiff- respondent found favour with the Additional District Judge, Rohtak and the first appellate court held the plaintiff entitled to receive damages and mesne profits at the rate of Rs. 10 per square feet calculated on 2616 square feet i.e. Rs. 26,160/- per month with effect from 7.3.2003 to 19.3.2005 minus the amount of Rs. 1,46,640/- already received at the rate of Rs. 6110/- per month in view of rental as per terms and conditions of lease settled between the parties. The plaintiff was also allowed pendent lite and future interest at the rate of 9% per annum with effect from the date, the amount became due till date of actual payment. A decree for recovery of Rs. 4,81,000/- was passed along with interest at the aforesaid rate with a direction to the plaintiff to affix requisite court fee on sum of Rs. 81,200/- within two months.
Feeling dissatisfied with the judgment and decree passed by the learned appellate court, the appellant, Bank of India is in appeal.
Counsel for the appellant strenuously argued that the appellate court gravely erred in holding that the bank is liable to pay damages and mesne profits of any amount in excess of rent which the bank was liable to pay in compliance with the terms and conditions of tenancy/lease. It is further argued that as the appellant-bank has already paid rent at the rate of Rs. 6110/- per month with effect from 7.3.2003 to the date of delivery of vacant possession of the suit premises to the plaintiff-respondent, the bank is not liable to pay any amount to the plaintiff-respondent, therefore, the judgment and decree passed by the appellate court may be set aside and the suit of the plaintiff-respondent may be dismissed. To substantiate his RSA No. 5139 of 2011 -4- contention, it is argued that on expiry of lease period and refusal of the landlord to extend the lease or asking for vacation of the premises renders the appellant to be a statutory tenant, entitle to protect its possession under the provisions of the Act, even after alleged termination of tenancy by the plaintiff-respondent. In addition, it is submitted that as the appellant-bank became statutory tenant on expiry of lease period, the respondent-plaintiff, could seek eviction of the bank from the premises in dispute and recovery of rent in view of terms and conditions settled between the parties at the time of creation of tenancy or subsequent thereto, if any, by taking recourse to the provisions of the aforesaid act. It is further argued that as the building in question was completed 20 years prior to the year 2003 when lease for the first time was created in favour of the bank, the respondent-plaintiff cannot seek exemption of the premises in question from applicability of the aforesaid Act which indisputably falls within urban area of the State of Haryana. For this purpose, counsel has invited attention to the provisions of Sections 1 and 2(h) of the Act.
Counsel for the respondent, on the other hand, while refuting contentions of counsel for the appellant has submitted that as soon as tenancy in favour of the bank stood terminated with effect from 7.3.2003, the bank is deemed to be in unauthorized possession of the suit premises entitling respondent-plaintiff to recover damages and mesne profits for illegal occupation by the bank, at the prevalent market rate of rent. It is further argued that the learned first appellate court has rightly relied upon the Division Bench judgment of Delhi High Court in National Radio & Electronic Company Limited vs. Motion Pictures Association, 2005(6) AD (Delhi) 515 to uphold plea of the respondent-plaintiff that he is entitled to RSA No. 5139 of 2011 -5- claim mesne profits and damages for continuation of possession despite termination of tenancy.
I have heard counsel for the parties and perused the records. The substantial question of law which arises for consideration is "what is the status of the appellant-bank after termination of tenancy with effect from 7.3.2003?"
Section 1(2) of the Act says that the Act shall extend to all urban areas in Haryana but certain areas and buildings have been exempted therefrom. A relevant extract from Section 1 of the Act is quoted for ready reference:-
"1.Short title and extent.-(1) xxx xxx xxx (2)It shall extend to all urban areas in Haryana but nothing herein contained shall apply to any cantonment area.
(3)Nothing in this Act shall apply to any building the construction of which is completed on or after the commencement of this Act for a period of ten years from the date of its completion."
Indisputably, the premises in dispute was let out to the Bank in the year 1982/1983 after construction of the building was completed by the landlord, therefore, it becomes an established position of the case that as construction of the building in dispute was completed 20 years prior to 2003, provisions of the Act would govern the premises in dispute which is admittedly situated within the urban area of Rohtak.
Section 2 of the Act deals with definitions and 'tenant' has been defined in sub section (h) of Section 2. As definition of tenant is germane to the controversy, it is usefully quoted hereinbelow:-
"2(h) "tenant" means any person by whom or on whose RSA No. 5139 of 2011 -6- account rent is payable for a building or rented land and includes a tenant continuing in possession after the termination of his tenancy and in the event of such person's death, such of his heirs as are mentioned in the Schedule appended to this Act and who were ordinarily residing with him at the time of his death, but does not include a person placed in occupation of a building or rental land by its tenant, except with the written consent of the landlord, or person to whom the collection of rent or fees in a public market, cart- stand or slaughter-house or of rents for shops has been framed out, or leased by a municipal town or notified area committee."
A plain reading of definition of tenant makes it crystal clear that it includes a tenant continuing in possession after the termination of his tenancy. As the appellant-bank continued to be a tenant even after termination of its tenancy with effect from 7.3.2003, the appellate bank is entitled to protection under the provisions of the Act to save its eviction unless ordered by a competent authority i.e. the Rent Controller. As the appellant Bank became a statutory tenant after termination of tenancy, it is difficult to accept contention of the respondent-plaintiff or affirm the findings of the first appellate court that the appellant-bank came to be in unauthorized occupation of the tenancy premises and thus made itself liable to pay damages and mesne profits in excess of the rental fixed between the parties in the light of terms and conditions of tenancy. The Hon'ble Supreme Court of India in Kalyanji Gangadhar Bhatat vs. Virji Bharmal and another1995(3)SCC 725 has held that a statutory tenant has every right to enjoy the estate or interest in the tenanted premises despite termination of his contractual tenancy. A Division Bench of this court in Registered Firm M/s Bhagwant Singh and Company through its registered partner Kartar RSA No. 5139 of 2011 -7- Singh vs. The Central Bank of India Branch at Kaithal through its Manager while dealing with the provisions of the Act has held that even after expiry of period of tenancy, the tenancy is governed by the terms of the rent deed executed by the tenant in favour of his landlord. In this view of the matter, it can be unhesitatingly concluded that the first appellate court fatally faulted in allowing the appeal.
Before parting with this order, it is appropriate to mention that the learned Additional District Judge, Rohtak despite noticing the aforesaid Division Bench judgment of this court still proceeded to fix liability of the bank to pay damages and mesne profits simply by holding that the Division Bench judgment relates to the question of fixation of fair rent. In the said case, though the Division Bench was dealing with the question of fixation of fair rent, it held in para 06 in the following terms:-
"6. We have duly considered the argument, but do not find any substance therein. The word 'statutory tenant' has not been defined anywhere in the Act. However, the word 'tenant' has been defined and it means any person by whom or on whose account rent is payable for a building or rented land and includes a tenant continuing in possession after the termination of his tenancy. From the definition, it is clear that the tenant after expiry of period of tenancy is entitled to continue in possession of the rented premises. The Act provides protection to such person. Therefore, in common parlance, he is called a statutory tenant. The Act is silent as to whether the terms of tenancy embodied in an agreement executed by him in favour of his landlord would be applicable RSA No. 5139 of 2011 -8- to him or not. However, we are of the view, that by implication the terms and conditions of the tenancy agreed between them; which are not against the provisions of the Act, would continue to govern them even after the expiry of the period of the lease."
Keeping in view the ratio laid down in the aforesaid judgment coupled with the fact that counsel for the respondent has not disputed the legal position that the appellant bank became a statutory tenant after termination of tenancy, the findings recorded by the first appellate court cannot be allowed to sustain. As a matter of fact, the first appellate court did not advert to the issue raised in the written statement, if the bank is a statutory tenant after termination of tenancy and, therefore, not liable to pay any damages and mesne profits and blindly placed reliance upon the Division Bench judgment of Delhi High Court in National Radio & Electronic Company Limited's case (supra) and proceeded to determine liability far in excess of, what was payable in view of the terms and conditions of the lease, agreed upon by the parties. The judgment passed by the first appellate court suffers from illegality and perversity, thus ordered to be set aside.
For the reasons aforesaid, the appeal is allowed, the judgment and decreed passed by the first appellate court is set aside and the suit of the plaintiff is ordered to be dismissed.
(Rekha Mittal) Judge 16.10.2014 paramjit