Delhi High Court
V. C. Jain vs Radha Kishan Poddar (Deceased) Through ... on 14 September, 2021
Author: Amit Bansal
Bench: Amit Bansal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 14th September, 2021
+ CM(M) 196/2021
V. C. JAIN ..... Petitioner
Through: Mr. Sanjeev Kumar Dubey, Senior
Advocate with Mr. Manish Gupta,
Advocate.
versus
RADHA KISHAN PODDAR (DECEASED) THROUGH HIS
LEGAL HEIR JAGDEEP PODDAR & ORS. ..... Respondents
Through: Mr. Pankaj Gupta and Ms. Rimpy
Gupta, Advocates for respondent Nos.
2 & 3.
AND
+ CM(M) 204/2021
V. C. JAIN ..... Petitioner
Through: Mr. Sanjeev Kumar Dubey, Senior
Advocate with Mr. Manish Gupta,
Advocate.
versus
RADHA KISHAN PODDAR (DECEASED) THROUGH HIS
LEGAL HEIR JAGDEEP PODDAR & ORS. ..... Respondents
Through: Mr. Pankaj Gupta and Ms. Rimpy
Gupta, Advocates for respondent Nos.
2 & 3.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
[VIA VIDEO CONFERENCING]
AMIT BANSAL, J. (Oral)
CM(M) 196/2021 with connected matter Page 1 of 10
Signature Not Verified
Digitally Signed
By:MAMTA ARYA
Signing Date:17.09.2021
12:53:05
CM No.22826/2021 (for fixing user & occupation charges) in CM(M) 196/2021
1. The present application has been filed on behalf of the respondents no.2 and 3 (landlords) for fixing the user and occupation charges in respect of the rented premises, Shop No.5179-A ad measuring 843 square feet (sq. ft.) located at Lahori Gate, Naya Bazar.
2. The facts relevant for deciding the present application are set out hereinafter. Shop No.5179-A (demised premises) was let out to the petitioner (tenant) at a monthly rent of Rs.300/- vide lease deed dated 20th July, 1990. On 2nd April, 1996, the landlords filed an eviction petition under Section 14(1)(a) of the Delhi Rent Control Act, 1958 (the Act). The Additional Rent Controller (ARC), vide judgment dated 23rd May, 2012, allowed the said eviction petition and the matter was put up for consideration of grant of the benefit under Section 14(2) of the Act to the tenant. The ARC vide order dated 28th July, 2012 granted the benefit of Section 14(2) to the tenant. Both the landlords as well as the tenant filed appeals under Section 38 of the Act before the Rent Control Tribunal (Tribunal); the landlords, against the order dated 28th July, 2012, and the tenant, against the judgment dated 23rd May, 2012.
3. By the impugned judgment dated 13th February, 2020 passed by the Tribunal, the appeal filed by the landlords against the benefit granted under Section 14(2) of the Act to the tenant was allowed, and eviction order was passed against the tenant in respect of the demised premises. The appeal filed by the tenants against the judgment passed by the ARC on 23 rd May, 2012 was dismissed.
4. The said judgment of the Tribunal has been challenged by the tenant CM(M) 196/2021 with connected matter Page 2 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 by way of the present petition under Article 227 of the Constitution of India. Vide order dated 5th March, 2021, while issuing notice in the petition, this Court granted stay on the operation of the impugned judgment passed by the Tribunal. The present application for fixation of user and occupation charges was filed by the landlords in July, 2021.
5. It is submitted by the counsel for the landlords that the demised premises are located on the main road of a busy commercial market of Old Delhi. In support of their application, the landlords have placed on record lease deeds dated 1st June, 2018, 6th December, 2019 and 25th October, 2018 in respect of shops no.5185-86, 5184 and 5579 located in the same area and adjacent/opposite to the demised premises. The aforesaid three shops, ad measuring 2550 sq. ft., 1200 sq. ft. and 127.62 sq. ft. have been let out at monthly rental of Rs.4,50,000/- per month, Rs.3,20,000/- per month and Rs.32,000/- per month respectively. Learned counsel for the landlords submits that taking into account the aforesaid rentals, the per sq. ft. rentals of the aforesaid shops work out as follows:
Sl. No. Property No. Current Rentals
1. Property bearing No.5185-86 Rs.203/- per Sq. Ft.
2. Property bearing No.5184 Rs.267/- per Sq. Ft.
3. Property bearing No.5579 Rs.251/- per Sq. Ft.
6. Mr. Pankaj Gupta, learned counsel for the landlords submits that the present case is squarely covered by the judgment of the Supreme Court in Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd., (2005) 1 SCC
705. In terms of paragraph 19 of the aforesaid judgment of the Supreme CM(M) 196/2021 with connected matter Page 3 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 Court, the applicants are entitled to reasonable rent with effect from the date the decree was passed, and in the present case, the eviction decree was passed on 13th February, 2020 by the Tribunal. Mr. Gupta has also relied on the judgment in Indian Umbrella Manufacturing Co. And Ors. Vs. Bhagabandei Agarwalla (Dead) by LRs. Savitri Agarwalla (Smt) and Ors., (2004) 3 SCC 178 to contend that the doctrine of merger in terms of Section 111(d) of the Transfer of Property Act, 1882 is not applicable in the present case.
7. Mr. S.K. Dubey, learned senior counsel appearing on behalf of the tenant contends that 1/3rd of the demised property has been sold by one of the co-owners, arrayed as respondent no.4 in the petition, to one Mr. Ashish Jain, who is the son of the tenant. He assails the impugned order passed by the Tribunal on merits. He places reliance on paragraph 20 of the judgment in Atma Ram Properties (P) Ltd. supra with regard to fixing of the user and occupation charges. He, however, does not dispute the lease deeds placed on record by the landlords.
8. I have considered the submissions made by the learned counsels appearing for the parties.
9. The law with regard to payment of user charges has been laid down by the Supreme Court in Atma Ram Properties (P) Ltd. supra. In this regard, reference may be made to paragraphs 18 and 19 of the aforesaid judgment:
"18. That apart, it is to be noted that the appellate court while exercising jurisdiction under Order 41 Rule 5 of the Code did have power to put the appellant tenant on terms. The tenant having suffered an order for eviction must comply and vacate the premises. His right of appeal is statutory but his prayer for grant of stay is dealt with in exercise of equitable discretionary CM(M) 196/2021 with connected matter Page 4 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 jurisdiction of the appellate court. While ordering stay the appellate court has to be alive to the fact that it is depriving the successful landlord of the fruits of the decree and is postponing the execution of the order for eviction. There is every justification for the appellate court to put the appellant tenant on terms and direct the appellant to compensate the landlord by payment of a reasonable amount which is not necessarily the same as the contractual rate of rent. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd. [(1999) 2 SCC 325] this Court has held that once a decree for possession has been passed and execution is delayed depriving the judgment-creditor of the fruits of decree, it is necessary for the court to pass appropriate orders so that reasonable mesne profits which may be equivalent to the market rent is paid by a person who is holding over the property.
19. 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 insofar 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 CM(M) 196/2021 with connected matter Page 5 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 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."
10. The said judgment of the Supreme Court has been followed by a Single Bench of this Court in R.K. Kainth Vs. Swadesh Kumar Bhagi & Ors. MANU/DELHI/2086/2020. The observations made by the Court in R.K. Kainth supra are set out below:
"15. Applying the above test, on the petitioner making out a prima facie case in his favour, he is entitled to an interim order against execution of the impugned decree of eviction, however, at the same time, has to be put to terms so as to also protect the interest of the respondent in case the petition is finally decided against the petitioner. The balance in terms of the judgment in Atma Ram Properties (supra) is achieved by putting the petitioner on such reasonable terms as would compensate the decree- holder/respondent for the loss occasioned by the grant of stay on the execution of the decree. In the present case, the submission of the learned counsel for the petitioner that the yardstick for such compensation can only be the loss of earnings from business that the landlord/respondent proposes to start on eviction of the tenant/petitioner, cannot be accepted. Though this can be one of the criteria to be kept in view by the court while determining the reasonable condition to be imposed on the tenant, other considerations like the rent of similar properties, would be equally, if not more, relevant for such determination. The yardstick for determining the mesne profits/terms that would reasonably compensate the decree holder for loss occurred in delay in execution of the decree would not only be the loss of income from the business for which the landlord intends to put the CM(M) 196/2021 with connected matter Page 6 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 property to use but the rent which the landlord may have to pay for obtaining a similar premises on rent for running the business which he intends to run from the tenanted premises. For this purpose, the lease deeds of the premises in the same locality are the best comparatives, duly adjusted for the area and the conditions of the tenanted premises. The paying capacity of the petitioner/tenant cannot normally be a relevant consideration for such determination.
xxx xxx xxx
18. In the present case, the tenanted premises is a shop admeasuring 302 sq. ft located in the Green Park, main market, which is certainly a prime location. The respondent no. 1/applicant has placed on record a registered lease deed dated 17.03.2017 with respect to the property bearing No. S-2B, Ground Floor, Green Park admeasuring 310 sq. ft. showing a rental of Rs. 2,15,000/- per month. He has placed another lease deed dated 06.03.2020 for shop no. S-1A, Green Park, Main market, admeasuring 230 sq. ft. and a rental of Rs. 1,90,000/- per month. Based thereon, the learned senior counsel for the applicant has vehemently submitted that the petitioner should be directed to deposit Rs. 2,50,000/- per month from the date of the eviction order during the pendency of the present petition.
19. The above lease deeds can certainly be taken as evidence of the reasonable rent expected out of the properties in the area in question. However, at the same time, the condition of the tenanted property as compared to these properties is also to be kept into consideration. It is also to be kept in consideration that these lease deeds are of a long duration of nine and six years respectively. Therefore, certain adjustment has to be made with respect to the rental shop in the present case.
20. In State of Maharashtra & Anr. v. Super Max International Private Limited & Ors., MANU/SC/1547/2009 : (2009) 9 SCC CM(M) 196/2021 with connected matter Page 7 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 772, the Supreme Court, while affirming the law laid down by Atma Ram Properties, further held that in fixing the amount of interim user and occupation charges as a condition of stay granted in appeal/revision against an order of eviction, the court would exercise restraint and would not fix any excessive, fanciful or punitive amount.
21. In my opinion, keeping in view the facts of the present case, Rs. 1,25,000/- per month would be a reasonable determination of the amount that the petitioner must pay/deposit as a condition of stay against the order of eviction passed by the Rent Controller."
11. The position of law that emerges from the above judgments is that the tenant has to compensate the landlords for the loss to be suffered by the landlords on account of stay granted by the Court on the execution of the impugned judgment passed in favour of the landlords. For fixing the compensation payable by the tenant to the landlord, the best indicator would be the lease deeds of similar premises situated in the same locality. Normally, the paying capacity of the tenant cannot be a relevant consideration for such determination.
12. As per the lease deeds placed on record by the landlords, the prevalent rent appears to be in the range of Rs.200 to Rs.270 per sq. ft. Based on the above, learned counsel for the landlords submits that the market rent in respect of the demised premises would work out to approximately Rs.1,90,000/- per month.
13. While this Court can consider the aforesaid lease deeds in determining the prevalent rent in the area, the absolute rental figures given in the said lease deeds may not be fully applicable in the facts and circumstances of the present case as the rental value is also dependent on other factors, such as the condition of the property, the date of construction CM(M) 196/2021 with connected matter Page 8 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 and the period of lease. Therefore, the Court must make certain adjustments before fixing user and occupation charges. As noted above, in Super Max supra, the Supreme Court held that the Courts should exercise restraint in fixing the user charges and should not fix any excessive and fanciful amount.
14. Learned senior counsel for the tenant disputes the area of the demised premises, 843 sq. ft., as stated by the landlords in this application. He draws the attention of the Court to the eviction petition as well as the judgment dated 23rd May, 2012 passed by the ARC to contend that the area of the demised premises is 632 sq. ft. Learned counsel for the landlords states that in reply to the present application, the tenant has not disputed the aforesaid area. He submits that the area of the demised premises, as given in the eviction petition as well as the judgment of the ARC refers to the site plan, which has not been filed by the tenant. The site plan has been subsequently filed by the landlords. A perusal of the site plan shows that other than the ground floor that measures 621.25 sq. ft., the demised premises also includes the mezzanine, ad measuring 221.666 sq. ft., which totals approximately 843 sq. ft., as given by the landlords in this application.
15. In my view, taking into account the facts and circumstances of the present case, Rs.1,00,000/- per month in respect of the demised premises would be a reasonable determination of the user and occupation charges that the tenant must deposit as a condition of stay of the impugned judgment passed against him.
16. Learned counsel for the landlords submits that the user and occupation charges may be fixed with effect from the date of the eviction decree passed by the Tribunal i.e., 13th February, 2020. However, the CM(M) 196/2021 with connected matter Page 9 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05 present petition was filed by the tenant only on 16 th February, 2021, one year after the impugned judgment was passed by the Tribunal. The landlords were free to execute the decree against the tenant from 13 th February, 2020 till the grant of stay by this Court on 5th March, 2021.
17. Accordingly, the tenant is directed to deposit with the Registry of this Court the user and occupation charges of Rs.1,00,000/- per month in respect of the demised premises with effect from October, 2021, on or before the 10th of every month till the pendency of the present petition, which shall be invested in a fixed deposit and the release of such amount with interest accrued thereon shall be directed by this Court at the time of final adjudication of the present petition. The arrears of rent from the date of grant of stay i.e. 5th March, 2021 till September, 2021 shall be cleared by the tenant on or before 30th November, 2021.
18. Accordingly, the present application is disposed of.
19. It is clarified that the above observations are only with regard to the present application and no observations are made on merits of the case. CM(M) 196/2021 & CM Nos.8995/2021 (Stay), CM No.8996/2021 (Addl. Documents), CM No.8998/2021 (Impleadment) CM(M) 204/2021 & CM No.9335/2021 (Stay), CM No.9336/2021 (Addl. Documents), CM No.9338/2021(Impleadment)
20. List for hearing on 15th November, 2021.
AMIT BANSAL, J.
SEPTEMBER 14, 2021/dk CM(M) 196/2021 with connected matter Page 10 of 10 Signature Not Verified Digitally Signed By:MAMTA ARYA Signing Date:17.09.2021 12:53:05