Andhra HC (Pre-Telangana)
Punjab And Sind Bank, Rep. Through Its ... vs Hotel Asrani Pvt. Ltd., Rep. By The ... on 12 August, 1997
Equivalent citations: 1997(6)ALT134
Author: A.S. Bhate
Bench: A.S. Bhate
JUDGMENT N.Y. Hanumanthappa, J.
1. All the above three appeals and cross-appeal have been filed challenging the common judgment in O.S.Nos.31/83, 44/83 and 49/83 dated 16-4-1991.
2. The Punjab and Sind Bank (for short 'the Bank') filed O.S.Nos.31/83 and 49/83 against M/s.Hotel Asrani (P) Ltd. Company (for short 'the Hotel') The Hotel filed two suits i.e. O.S.Nos.44/83 and 397/83 against the Bank. O.S.No. 31/83 was filed by the Bank for recovery of a sum of Rs. 2,00,000/- alleged to have been advanced by the Bank to the Hotel on 6-1-1978 with interest at the rate of 6% p.a. above the R.B.I, rate subject to minimum of 15% p.a. from 6-1-1978 till the actual date of payment. O.S. No. 49/83 was filed by the Bank against the Hotel and its Managing Director, namely, Atmaram and Directors M/s.Ramesh K.Agrawal and Shamlal K. Asrani, for recovery of a sum of Rs. 3,00,000/- alleged to have been advanced by the Bank to the Hotel and its Directors on 14-9-1978 with interest at 6% p.a. above the R.B.I, rate subject to minimum of 15% p.a. O.S.No. 44/83 was filed by the Hotel against the Bank for recovery of possession of the suit schedule premises the ground floor bearing No. 1-7-179 to 181, M.G.Road, Secunderabad and for mesne profits amounting to Rs. 1,20,000/- at the rate of Rs. 15,000/- per month with interest at the rate of 18% p.a. and for future mesne profits. O.S.No. 397/83 was again filed by the Hotel against the Bank for recovery of a sum of Rs. 73,333.35 ps. claiming interest at the rate of 24% p.a. asking the Hotel to pay the principal amount of Rs. 50,000/- on the F.D.R. deposit made by the Hotel with interest etc.
3. C.CCA.No. 10/92 is filed by the Bank aggrieved by the Judgment and 45 Decree passed in O.S.No. 49 /83 so far as it relates to restricting claim for interest at the rate of 15% simple interest per annum. CCCA No. 51/92 is filed by the Bank aggrieved by the judgment and decree passed in O.S.No. 31/83 so far as it relates to restricting claim for interest at the rate of 15% simple interest per annum. CCCA No. 51 of 1991 is filed by the Bank aggrieved by the judgment and decree for eviction and mesne profits in O.S.No. 44/83.
4. Cross-Appeal is filed by the Hotel aggrieved by the judgment and decree passed in O.S.No. 44/83 so far as relates to granting mesne profits both past and future less than what was claimed.
5. For the purpose of disposal of these appeals, the rank of the parties is referred as Bank and Hotel.
6. The facts in each suit read as follows:
O.S.No. 31/83:
The case of the bank is that it is a Nationalised Bank having its head office at New Delhi and having branches in several places and also in M.G.Road, Secunderabad. It occupied a portion of the suit schedule building belonging to the hotel as its tenant. The rents payable by the bank to the hotel for the portion in their occupation were being adjusted towards the liability of the hotel under the pronote executed by the hotel in favour of the bank on 6-1-1978 for a sum of Rs. 2,00,000/-. The hotel was due to pay a sum of Rs. 2,04,027.18 ps. The bank called upon the hotel by its letter dated 12-12-1980 to pay the amount under the pronote or execute fresh documents. The hotel neither paid the amount nor executed fresh document. Hence the suit.
7. The hotel filed its written statement admitting the receipt of Rs. 2,00,000/-. But, it is alleged, that the Bank obtained the signatures of the Managing Director of the hotel on certain documents on the pretext that they are usual documents required for purpose of securing repayment of the said amount as collateral security. It averred that the interest charged by the bank is excessive, exhorbitant and penal. The hotel denied the entitlement of the bank to claim compound interest with quarterly rests. According to the hotel, the amount was advanced under different set of circumstances. It admitted the tenancy but pleaded that the bank failed to fulfil the conditions stipulated between the parties at the time of entering into the tenancy and lending the suit amount simultaneously. Accordingly a notice was issued to the bank on 30-10-1980 terminating the tenancy of the bank in respect of the schedule premises belonging to the hotel. Since the tenancy was terminated w.e.f. November, 1980, the hotel claimed that the bank is liable to pay damages or mesne profits for its use and occupation of the schedule premises subsequent to November, 1980. The hotel pleaded that Rs. 2,00,000/- alleged to have been advanced by the bank to the hotel was obtained specifically for construction of the premises to be offered to the bank. The said amount was adjustable within five years out of the rents payable to it and, thus, the said amount stood liquidated and discharged. Since the bank committed breach of the agreement, it is not entitled to recover Rs. 2,00,000/-. It was also averred that the hotel is prepared to pay the amount found due, if the bank vacates the premises and hands over the vacant possession of the same. It disputed the calculation made by the bank. It lastly contended that the hotel is prepared to pay whatever amount due as against the total advance given by the bank in a sum of Rs. 5,00,000/- consisting of two items of Rs. 2,00,000/- for the construction of building and Rs. 3,00,000/- against the charge of the furniture etc.
8. On the above pleadings, the following issues were framed by the Trial Court:
1. Whether the plaintiff is entitled to recover the suit amount from the defendant?
2. Whether the suit for recovery of the suit amount is not maintainable as rents due to the defendants would be adjusted to the loan due from the defendants?
3. Whether the interest claimed is usurious, excessive and penal?
4. Whether the suit is barred by time? To what relief?
9. O.S.No. 49/83: This suit was filed by the bank against the hotel and its Directors and Managing Director reiterating the averments made in O.S.No. 31/83 in addition to alleging that the Managing Director of the hotel approached the bank for a loan of Rs. 3,00,000/- on 14-9-1978 and agreed to repay the said loan amount at the rate of Rs. 10,000/- per month commencing after six months after the loan. The hotel through its Managing Director -5 hypothecated in favour of the bank the fixed assets including the land and building to secure the loan amount of Rs. 3,00,000/-. The hotel executed a pronote for the said amount as a collateral security on 14-9-1978. Its Directors and Managing Director executed letter of guarantee, agreeing to repay the said amount with interest at 6% above the R.B.I, rate subject to minimum of 15% p.a. The hotel withdrew the said amount completely. The bank registered the hypothecation deed dated 14-9-1978 with the Registrar of Companies on 22-1-1979 as required under Section 102 of the Indian Companies Act. It pleaded that the hotel is liable to pay to the bank a sum of Rs. 3,87,828.97 ps.
10. The hotel filed its written statement reiterating the stand taken by it in O.S.No. 31/83. It pleaded that the bank obtained the signatures of the hotel on several documents which were blank. It obtained the signatures of the Directors and Managing Director on printed blank forms without filling them. The contents of the said documents were never read over nor explained to the hotel and its directors. While getting the signatures on printed blank forms they were given to understand that their signatures were required on such documents to process the loan application. According to the hotel no liability can be fastened on them on the basis of prepared documents and the alleged letter of guarantee dated 14-9-1978 is not valid and binding on the Directors and Managing Director as their signatures were obtained on printed blank forms. The statement of account referred to by the bank is not correct and the interest claimed is excessive, exhorbitant and penal in nature. Its case was that the bank was in need of a better premises to locate its Secunderabad branch. It approached the hotel to lease out the premises. Then an agreement was reached that the hotel shall lease out its premises to accommodate the bank's branch with reciprocal promise by the bank that it shall advance a sum of Rs. 5,00,000/- to the bank. Accordingly it advanced Rs. 2,00,000/- and Rs. 3,00,000/- for purpose of construction of the building and against the charge of furniture and fixtures respectively. Thus, the loan and the lease were co-terminus and correlated. The bank cannot recover the amount advanced to the hotel unless it vacates the premises. The hotel is ready to pay whatever amount legally found due as soon as the plaintiff bank vacates the suit premises.
11. On the above pleadings, the trial Court framed the following issues:
1. Whether the plaintiff is entitled to recover the suit claim as prayed for?
2. Whether the interest claimed at 18% is excessive?
3. Whether the suit is not maintainable for consensus between the parties?
4. To what relief?
12. O.S.No. 44/83: This suit was filed by the hotel against the bank for recovery of possession of the schedule premises and for mesne profits amounting to Rs. 1,20,000/- at the rate of Rs. 15,000/- per month with interest at the rate of 18% p.a. and future mesne profits. It was averred that the hotel constructed the suit schedule premises which is a business-cum-hotel complex at M.G.Road, Secunderabad. As the bank agreed to advance a sum of Rs. 2,00,000/- for construction and Rs. 3,00,000/- against the charge of movables, furniture and fixtures etc., to the hotel, the hotel agreed to grant the lease of the suit premises to the bank. The hotel pleaded that there is no written lease nor any lease deed had been registered in favour of the bank and the consideration for the lease being the advance of Rs. 5,00,000/-. The bank is not entitled to claim any fixed period of tenancy or lease. The bank revoked the agreement between the parties by filing the suits for recovery of Rs. 5,00,000/-. As such the bank is not entitled to claim continuation of any lease or tenancy and its possession is not valid one and is liable to be terminated by a notice under Section 106 of the T.P. Act. As the bank violated the terms of the lease, a notice was issued on 30-10-1980 terminating the tenancy w.e.f. the end of November, 1980 which was received by the bank. But it did not choose to vacate the premises. Since the bank continued in possession of the schedule premises unauthorisedly even after the termination of the tenancy, it is liable to pay the mesne profits from December, 1980 till the end of July, 1981 for a period of eight months at the rate of Rs. 15,000/- per month and it is also liable to pay future mesne profits at the rate of Rs. 15/- per square toot. Hence the suit for possession and mesne profits.
13. The bank filed its written statement contending inter alia that the entire premises was not meant for the hotel complex alone and that the bank was having its office previously at 107 Park lane, Secunderabad and when the hotel represented the bank that they are having accommodation to lease out ad measuring about 2,000 Sq.feet at the rate of Rs. 1.20 per sq. foot per month and they have agreed to construct a strong room as per the specifications of the bank, the bank accepted the offer and they advanced the amount. But the bank denied that the said amount is the consideration of the lease. The amounts so advanced were independent the bank loan transaction and to be adjusted towards the interest of Rs. 2,00,000- and in the event of there being any excess to the said amount the hotel agreed to clear the loan in a period of 5 years. The bank further pleaded that the initial period of lease was for a period of 5 years and the same can be extended on the same terms and conditions. The bank occupied the premises on 1-1-1978. It was alleged that the hotel submitted a draft lease deed to the bank for approval. The bank approved the draft and submitted to the hotel for perusal requesting to return the same for taking further action. But the hotel was postponing the same on some pretext or the other. It was also pleaded by the bank that it is entitled to occupy the premises for a total period of 15 years as per the terms originally agreed upon and the hotel is estopped from pleading to the contrary. It was alleged that it is the hotel that committed the breach to perform its part of the agreement to get the lease deed executed. On account of the inaction of the hotel the bank is entitled to be in possession of the premises for three consecutive periods of 5 years each commencing from 1-1-1978. It was alleged that the notice under Section 106 of T.P. Act is bad in law. The conduct of the hotel forced the bank to file the suits. It disputed its liability to pay the mesne profits as claimed by the hotel.
14. On the above pleadings, the following issues were framed by the Trial Court:
1. Whether notice dated 30-10-1980 terminating the tenancy is not valid nor legal?
2. Whether the suit is not maintainable as per the provisions of the A.P.Rent Control Act (is applicable)? 35
3. Whether the plaintiff is estopped from pleading against the terms agreed between the parties earlier as pleaded by defendant?
4. Whether the plaintiff (hotel) is not entitled to terminate the tenancy unilaterally?
5. Whether the suit is not properly valued?
6. Whether the plaintiff is entitled to eviction of the defendant (bank) from the suit premises as prayed for?
7. Whether the plaintiff is entitled to past and future mesne profits, as prayed for?
8. To what relief?
15. O.S.No. 397/83 was filed by the hotel against the bank for recovery of a sum of Rs. 73,333.35 ps on 24-4-1982 claiming interest at the rate of 24% per annum on the amount of Rs. 50,000/- which was deposited by the hotel in the form of F.D.R. The said amount was deposited as 25% margin amount for the guarantee in favour of A.P. State Financial Corporation. The said sum of Rs. 50,000/- was kept as a margin amount in the fixed deposit in the bank and the bank executed a guarantee in favour of State Finance Corporation for a period of three years which expired on 12-3-1980. The bank kept continued to the said amount without noticing the F.D.R. co-terminus with the guarantee given by the bank to the A.P. State Finance Corporation which expired on 12-3-1980. There was no claim by the said Finance Corporation. On 17-9-1981, the said Finance Corporation wrote a letter to the bank to return the bank guarantee which was executed in its favour. The hotel asked the bank on 22-9-1981 to return Rs. 50,000/- along with interest accrued thereon failing which the bank will be held responsible to pay interest at 24% per annum. Instead of returning the amount covered under the F.D.R. with interest, the bank renewed the F.D.R. without the knowledge of the hotel. A notice was got issued on 14-11-1981 to the bank to return the entire amount, but the same was not complied with. Hence the suit. The bank though filed two suits O.S.Nos.31/83 and 49/83 for recovery of Rs. 2,00,000/- and Rs. 5,00,000/- (sic.) respectively there was no mention as to the F.D.R.
16. The bank filed its written statement. It admitted the receipt of F.D.R. and giving guarantee to the A.P. State Finance Corporation. It denied the F.D.R. 25 to be matured on the dates mentioned. It admitted that the said Finance Corporation did not make any claim, but pleaded that the bank had to adjust the said amount as the hotel obtained two loans of Rs. 2,00,000/- and Rs. 3,00,000/-. The bank claimed a Banker's lien over the F.D.R. amounts till the amounts advanced by the bank are discharged. The F.D.R. did not mature at the time of filing of the suits by the bank. On the other, the F.D.R. was matured on 13-5-1980 which was renewed for a further period of three years maturing by 13-5-1983 on verbal instructions of the hotel. Thus, the bank denied the hotel's claim.
17. Basing on the above pleadings, the Trial Court framed the following issues:
1. Whether the plaintiff is entitled to recover the suit claim from the defendant?
2. Whether the plaintiff is entitled to interest at 24% p.a. prayed for? 40 3. To what relief?
18. As the questions involved in all the suits were almost similar or interlinking the Trial Court clubbed all the suits and called upon the parties to adduce evidence simultaneously, On the bank side ten witnesses were examined as P.Ws, 1 to 10 and 34 documents were marked as Exs.A-1 to A-34. On hotel side five witnesses were examined as D.Ws. 1 to 5 and 29 documents were marked as Exs.B-1 to B-29.
19. After assessing the entire evidence, the Trial Court decreed the suit OS 31/83 holding that the bank is entitled to recover Rs. 2,00,000/- with 15% simple interest from the hotel from 6-1-78 till the date of realisation. The Trial Court also decreed the suit O.S.No. 49/83 holding that the bank is entitled to recover Rs. 3,00,00/- with 15% simple interest from the hotel from 14-9-1978 till the date of realisation. It held that the bank is entitled to the interest only at the rate of 15% simple interest. The Trial Court decreed the suit O.S. No. 44/83 filed by the hotel against the bank holding that the notice dated 31-10-1980 issued by the hotel terminating bank's tenancy as valid and legal, and found that the A.P. Rent Control Act has no application to the premises in question. It held that the hotel is entitled to claim eviction of the bank from the schedule premises. The Trial Court also held that the hotel was entitled to terminate the tenancy as per Section 106 of the Transfer of Property Act. It also ordered mesne profits of Rs. 1,20,000/- together with simple interest at 15% per month and also future mesne profits from the date of the suits till the date of handing over possession at the rate of Rs. 10/- per sq. foot of the premises for the total area of 2300 Sq. feet occupied by the bank granting three months time to the bank to pay the amount and deliver possession of the suit premises.
20. Aggrieved by the judgment and decree passed by the learned Addl. Chief Judge, City Civil Court, Secunderabad in O.S.No. 31/83, the bank filed C.C.C.A.No. 51/92. Aggrieved by the judgment and decree passed by the learned Addl. Chief Judge, City Civil Court, Secunderabad in O.S. No. 49/83, the bank filed C.C.CA.No. 10/92. Aggrieved by the judgment and decree passed by the Addl. Chief Judge, City Civil Court, Secunderabad in O.S.No. 44/83 again the bank filed CCCA No. 51/91. Aggrieved by the same judgment and decree in O.S.No. 44/83, the hotel filed Cross-Appeal SR No. 52048/91 claiming for enhancement of mesne profits both past and future . As against the judgment and decree passed in O.S.No. 397/83 filed by the hotel against the bank, the same is not challenged in appeal by the bank. Thus, the said judgment and decree have become final.
21. For purpose of disposal of the suits, the Trial Court addressed itself on two aspects - one in respect of recovery of possession and mesne profits as claimed by the hotel in O.S,No,44/83 and the second aspect regarding recovery of money alleged to have been advanced by the bank to the hotel in a sum of Rs. 2,00,000/- and Rs. 3,00,000/- in O.S.Nos.31/83 and 49/83 respectively and the liability of the hotel to pay interest. The Trial Court while considering the evidence found that there was no registered lease deed executed for the period as claimed by the bank. It took into consideration the evidence available both oral and documentary and reached the conclusion that the tenancy was one of monthly tenancy and the same was terminated by issuing a notice dated 30-10-1980 as required under Section 106 of the Transfer of Property Act terminating the tenancy by the end of November, 1980.
22. The Trial Court analysed the evidence of P.W.1, Satpal Singh, an officer of the bank who spoke about the execution of several documents by the hotel in favour of the bank which are not in dispute. P.W.2, Major Singh, an officer of the bank of Abids branch who spoke about preparing of Ex.A-10 statement of account and who confirmed the deposit of F.D.R. and execution of bank guarantee. He stated that as per Ex.B-2, the interest on the amount advanced by the bank to the hotel was at 15% simple without periodical rests. He admitted that no regular deed was executed by the hotel in favour of the bank to occupy the schedule premises. PW-3, Manjeet Singh, another officer of the bank spoke about the existence of F.D.R. and the entitlement of interest at 9% on the said F.D.R. Both parties (agreed) that the amount in deposit alongwith interest shall be adjusted towards the loan amount advanced to the hotel. P.W.4, S.Ramesh, another officer of the bank spoke about the transaction and the purpose for which the two loans were advanced. He admitted that the loan was advanced for construction of strong room in the schedule premises for the use and occupation of the bank. He admitted that strong room was constructed according to the bank's specification. The bank examined Harjoth Singh, the manager of the bank but his evidence was of no use to the bank as he admitted that he has no personal knowledge about these transactions.
23. Regarding rate of rents prevailing, the bank examined one Bhagendera Singh, Cashier of the bank as P.W.6 who spoke about the prevailing rate of rent in that area paid by other business concerns. In the case of Andhra Bank, he deposed that the rent it was paying was Rs. 3.75 ps. per Sq. foot. In the case of Srinadh complex, he deposed that it was paying rents at the rate of Rs. 8/- per Sq. foot. P.W.7, Manager of the State Bank of Travancore stated that for the premises in occupation of the said bank though the rent was fixed at Rs. 3.50 ps. per Sq. foot subsequently it was increased to Rs. 4.50 per Sq. foot. He stated that originally the rent in respect of the premises in occupation of the State Bank of Travancore was fixed at Rs. 9,000/- per month and it was enhanced by 25% after expiry of the lease period. P.W.8, one Srinivasa Murthy, Sub-Manager of the Andhra Bank stated that the rent the bank was paying was fixed at Rs. 3.75 ps. per Sq. foot. The evidence of P.W.9 is not so useful to either of the party. The evidence of PW-10, Suresh Malaka Dhaftary, deposed about the condition of the schedule premises.
24. As against the evidence, the Director of the hotel Mr. Atmaram Asrani was examined as D.W.I. His entire evidence is a reiteration of the averments made in the written statement. According to him the bank is entitled to recover money advanced to the hotel after it vacating the premises. He stated that no lease deed was executed in respect of the schedule premises. As such the tenancy was a monthly one. He denied that the tenancy was for five years with an option of two renewals of five years each. According to him the hotel is liable to pay interest, if any, on the amount advanced only at 15% simple. One Mr. Shamshuddin Ahmad, a Chartered Engineer, was examined by the hotel as D.W.2 who spoke about the prevailing rate of rent in respect of similar buildings and other buildings situated round about the schedule premises. He made a reference to G.O.Ms.No. 1302, dated 18-5-1982 and deposed that Rs. 15/- per Sq. foot will be the reasonable rent in respect of the schedule premises. D. W.3, Charajit Singh Chandhok is the Bank's employee and D. W.4, Nageswara Rao, is the manager of the cloth shop and they also spoke about the prevailing rents. Whereas D.W.5 Zaleel Khadri, manager of the hotel, deposed that taking into consideration the age of the building, and location as on the date of filing of the suit, the reasonable rent for the schedule premises for the ground floor is Rs. 12/- per square foot and Rs. 5/- per square foot for the 5th floor. He deposed that the bank obtained another premises during the same period in the Ministerial Road paying rent at Rs. 8/- per square foot with an increase of 10% every year.
25. To support its case and applicability of Section 53-A of Transfer of Property Act (for short 'T.P.Act'), the appellant Bank placed reliance on the following decisions: "Probadh Kumar Das and Ors. v. Dantamar Tea Co. Ltd., AIR 1940 PC 1.: Maneklal v. H.J. Ginivalia & Sons, : Jeevam v. Mahtlb, AIR 1953 Hyd. 77.: Technicians Studio v. Lila, .: Ranchhoddas v. Devaji, AIR 1977 SC 1517.: B.P.Sinha v. Somnath, .: Nagarkhan v. Gopiram, .: Mahadei Haluai v. Ram Krishna, .: Ramayan Saran v. Patna Improvement Trust, .: Nana Saheb v. Appa, AIR 1957 Bombay 138: Venkayya v. Seshayya, ."
26. After assessing the entire oral and documentary evidence produced by both sides, the Trial Court held that the tenancy was a monthly one and issuing of notice under Section 106 of the T.P. Act terminating the lease was valid one. Thus, the termination holds good. Having reached the conclusion that termination holds good, the Trial Court held that the hotel is entitled for possession of the premises and the bank's continuation in occupation of the premises subsequent to the date of determining the tenancy makes it liable to pay mesne profits. It held that for the period from December, 1980 till July, 1981, the hotel is entitled for rent at Rs. 15,000/- per month. Thus, the hotel is entitled for Rs. 1,20,000/- towards mesne profits. Regarding future mesne profits, the Trial Court took into consideration the prevailing market rate as admitted by the witnesses and held that the hotel is entitled for mesne profits at Rs. 10/- per square foot. The Trial Court found that Exs.A-1 to A-7 on which reliance was placed by the bank, they were all blank at the time of entering into the transaction and they were filled up by the bank subsequently putting the rate of interest to suit its own purpose. It also held that the transaction between the bank and the hotel namely lease and loan are correlated and co- terminus. Having reached that conclusion, the Trial Court held that the bank is entitled to recover from the hotel both the amounts of Rs. 2,00,000/- and Rs. 3,00,000/- with 15% simple interest after giving credit to Rs. 70,000/- which amount the hotel paid to the bank on 31-10-1979. Regarding the question of renewing the tenancy, the Trial Court found that: the same did not arise as the bank had neither paid the rents regularly nor there was any lease deed. Section 53-A of Transfer of Property Act is not applicable to the facts of the case as the bank had not performed its part of the contract. It also observed that the termination of lease under Section 106 of the Transfer of Property Act was a valid one. On the applicability or otherwise of several decisions relied upon by both sides, the Trial Court applied its mind to the principles laid down in various decisions relied upon by the bank and ultimately found that all those decisions relied upon by the bank were based on a written contract whereas in the case on hand no such lease deed was there and as such the transaction void. Thus, no right is conferred on the bank. It also observed that if the lease itself was for five years, the bank should have waited until the expiry of five years but it chose to file the suits within that period. Thus it resiled from the contract entered upon. Thus, the Trial Court decreed O.S.No. 31/83 and O.S.No. 49/83 but granted interest only at the rate of 15% simple. In O.S.No. 44/83, the Trial Court granted the request of the hotel for eviction of the bank from the schedule premises and recovery of possession. Regarding mesne profits as against the claim of the hotel in a sum of Rs. 2,500/- per month, the Trial Court ordered at Rs. 15,000/- per month as rent for the period December, 1980 to July,1981 which covered past mesne profits. In respect of future mesne profits, it ordered at Rs. 10/- per Sq. foot.
27. The Bank in all these appeals sought to attack the judgment and decrees of the Trial Court on the following grounds:
When the hotel admitted the existence of several documents including Ex.A-16, dated 20-4-1.977 and Ex.A-19, dated 30-5-1977 the Trial Court should have held that the transaction was one of lease for a period of 15 years - first five years with two renewals of 5 years each and execution of lease deed was just a formality. The Trial Court brushed aside the evidence of DvV-1 who admitted the existence of Exs.A-16 to A-19 and A-21. Drawing of adverse inference by the Trial Court on adjustment of rents towards loans advanced by the bank is quite incorrect. When the lease was for a period of 15 years the bank is entitled to seek protection under Section 53-A of Transfer of Property Act as held by the Supreme Court in Maneklal v. H.J. Ginwalla & Sons (2 supra). The finding of the Trial Court that the applicability or otherwise of the decisions relied upon by the bank is quite incorrect. The Trial Court did not give any finding on the applicability of the decision rendered by the Supreme Court cited (2 supra). The Trial Court should have noticed that even in the absence of a registered lease deed, the existence of transaction can be inferred from other surrounding circumstances and, thus, Section 53-A the Transfer of Property Act applies to the case of the Bank. The findings that Exs.A-19 and A-21 should have been registered is quite incorrect. If there was no option clause, the bank would have vacated the premises during the pendency of the suit. The observation of the Trial Court that the transaction of loan and lease were co-related and co-terminus is quite incorrect. There was no breach of contract on the part of the bank. Yet the Court held that there was breach of contract. The finding of the Trial Court that the benefit of Section 53-A cannot be extended is quite incorrect and illegal. The order of eviction of the schedule premises granted by the Court below is quite incorrect and illegal. The reasoning of the Trial Court to hold that the hotel is entitled for past mesne profits at Rs. 15,000/-per month amounting to Rs. 1,20,000/- for the period from December, 1980 to July, 1981 and future mesne profits at Rs. 10/- per sq. foot is not only arbitrary but also not based on proper appreciation of evidence. When the lease was for 15 years and the suit for eviction filed within that period, the Trial Court should have held that the bank is not liable to pay the mesne profits for the period subsequent to December, 1980. The Court below should not have placed reliance on the one-sided version of the hotel to arrive at the prevailing market rate. The finding of the Court below in not awarding interest above 15% p.a. but only granting at the rate of 15% simple interest is quite incorrect. Reasons given to disallow the interest above 15% is quite incorrect and unreasonable. The Court below brushed aside the evidence of the bank and accepted in toto the evidence of the hotel. Thus, the procedure followed by the Court below in disposing of the suits does not inspire confidence and the same requires to be interfered with by ordering that the bank is entitled to claim interest on the amounts advanced above 15%. Regarding mesne profits, the bank is liable to pay the rent only at Rs. 1.20 ps. per square foot as agreed and not at the rate as determined by the Trial Court. 25
28. Sri Suryanarayana Murthy, the learned Counsel for the appellant further urged that the transaction of lease was initially for 5 years with option to renew the same for further period of 10 years of five years each. Though the lease deed is not registered, yet Section 53-A of the T.P. Act is applicable to the facts of the case. Thus, the termination of lease is not valid. The Trial Court should not have ordered for past and future mesne profits in these proceedings, instead allowed it to be determined separately under Order 20 Rule 12 of C.P.C. Also contended that the rate of interest on the amount advanced should have been 6% above the R.B.I. rate of interest instead of 15% simple interest as ordered by the Court. The Trial Court should not have ordered the counter claim in O.S.No. 49 of 1983.
29. To support his contentions, he placed reliance on the following decisions: Sivarama Krishnayya v. Kasi Viswanadham, 1956 An.W.R. 1004. wherein it was held as follows:
"In the case of a letter where there can be no possible question of 'execution' (in a particular sense) proof of a man's signature under it is surely prima facie proof that the contents of the letter are attributable to his authorship. If a person denies that he has written a letter which contains his signature, then surely he must prove what he alleges, i.e., that the letter was got upon a blank piece of paper containing his signature, as also the circumstances in which he happened to put his signature on such a piece of paper. There is no question of proving the 'execution' of a letter by the signatory. Even where formal execution as such has got to be proved, cases have held that where a man's signature appears in a document at the place where the executant of such a document would normally sign, then the signature may prima facie be taken as having been put in token of execution and that therefore the proof or admission of a signature in a document requiring the execution 10 in a particular form is prima facie proof that the document was executed by the signatory, because, normally, it has to be presumed under Section 114 of the Evidence Act that a person only puts a signature in a document in token of his execution thereof."
Maneklal v. H.J. Ginwalia & Sons (supra) wherein it was held as follows:
"An agreement of lease creating a present demise but not registered is admissible under Section 49, Registration Act as evidence of part performance ........... A formal lease is not necessary to attract the application of Section 53-A of the T.P.Act. All that is required is that an agreement in writing signed by the transferor can be gathered from the evidence .... Where in an action to eject a lessee on the ground that he had no registered deed of lease executed in his favour the defendant lessee takes the plea of part performance and proves that there was a written and signed contract of lease in his favour and that he had taken possession in accordance with the terms of the agreement and had built a factory on the land and also that he was paying rent to the plaintiff in accordance with that agreement the defendant is entitled to retain possession in spite of an absence of the registered deed."
Kapur Chand v. Kanji, 1959 (1) An.W.R. 143. wherein it was held as follows:
"Section 113 of the Transfer of Property Act, Illustration (a), of the Transfer of Property Act is analogous to the provision in English law but with this difference that while in the English law the consequence of waiver would be that the whole tenancy would be terminated and a new tenancy created, such is not the case under the Indian law. It only purports to continue the old tenancy. Practically it amounts to the landlord withdrawing the notice to quit.
In the instant case, the receipts (after the expiry of the period of tenancy) speak of rents having been paid and it is not a casual payment of a rent for one month but successively the landlord has been receiving them for a period of seven months without a demur and this circumstance certainly goes to establish that the landlord intended to treat the terminated tenancy as continuing. The point of time to judge the intention of the tenant as to whether he also agreed to the continuance of the old tenancy has to be judged is the date following the expiration of the lease. If after this he continues to pay amounts to the landlord month after month by way of rent, it would certainly be regarded as evidence of the intention on the part of the tenant to continue the tenancy. By the continuance of the tenant's possession by paying rent and the acceptance of rent by the landlord, the relationship of the parties would be presumed in law to be one of landlord and tenant. In every case it has to be determined as a question of fact as to whether the payment by the tenant and the acceptance of the amount by the landlord could be regarded as constituting waiver of notice.
In a case even where the tenant sets up the permanent tenancy or a lease for a particular period in contra-distinction to a tenancy from month to month or from year to year and is not able to establish that,, he would not be debarred from putting forward the plea of waiver if he can establish that the landlord accepted rents subsequent to the expiration of the period of tenancy. The acceptance of rent by the landlord for the period of 7 months amounts to an intention to continue the old tenancy and as such the tenant could not be evicted on the termination of the period fixed in the notice to quit."
Metal Press Works, Calcutta v. G.M. Cotton Press Co., . wherein it was held as follows: 20 " The tenancy created by the tenant holding over is a new tenancy. In order to bring or create a new tenancy into existence, there must be a bilateral act. The principle underlying Section 116 is implied contract and the test of renewal is the consensus between the lessor and the lessee but not an option exercisable by either of the parties. It is the assent of the landlord for the tenants continuing in possession, but not the acceptance of rent by itself, after the expiry of the term of lease that is the foundation for the new tenancy. The assent of the landlord is based on the acceptance of rent as such. That apart the animus of the tenant in tendering the rent also is material. Where the tenant tendered the rent as rent payable under the Rent Acts like Bombay Rent Act, Calcutta Thika Tenancy Act etc., which create statutory tenancy, the acceptance of rent in such circumstances by the landlord does not create a tenancy by holding over, as the landlord has no other option but to accept the same because he cannot evict the tenant even after the expiration of the lease period as his right to remain in possession is created by virture of the Rent Act.....
The expression 'agreement to the contrary' used in Section 116 is referable to the terms of the tenancy created by the tenant holding over but not to the terms of the original lease. In the absence of any such agreement to the contrary, the statutory tenancy created under Section 116 has to be invariably determined in accordance with the provisions of Section 106. The parties are at liberty to agree with regard to the terms of the statutory tenancy. Such agreement may be entered into between the parties either at the time of the original lease or at the time when the new tenancy by holding over is created."
M. Annapurnaiah v. M. Narasimha Rao, wherein it was held as follows:
"After a lease is terminated if the tenant continues in possession without the consent or acquiescence of the lessor, such a tenant is a 'tenant by sufferance'. He cannot be deemed to be 'holding over' when there is no proof or extension of lease in his favour. Possession of a tenant by sufferance cannot be considered as unauthorised. The possession of a tenant by sufferance is a 'juridicial possession'. The possession of such a tenant should be protected by the Courts. It is always better that a 'person' is driven to a Court of law rather to permit him to forcibly evict a tenant. A tenant by sufferance is entitled to remain in possession of the demised premises till he is evicted in the course of law."
Chander Kali v. Jagdish Singh, the Supreme Court held as follows:
"A tenant even after the termination of his contractual tenancy does not become an unauthorised occupant of the accommodation but remains a tenant. Such a tenant is conveniently called a statutory tenant. Whether the expression aforesaid borrowed from the English Law is quite apposite or not, but, what is certain is that a person continuing in possession of the accommodation even after the termination of his contractual tenancy is a tenant within the meaning of the Madhya Pradesh Accommodation Control Act, 1961 and on such termination his possession does not become wrongful, until and unless a decree for eviction is made. If he continues to be in possession even after the passing of the decree, he does so as a wrongful occupant of the accommodation...........
If a suit is filed on the ground of non-payment of rent after termination of the contractual tenancy, the tenant still continues to be a tenant liable to pay rent not only for the past period but in future also. In absence of a decree of eviction, the person in occupation of the accommodation continues to be a tenant and is not liable to pay any damages as his occupation is not unauthorised or wrongful even after the termination of the contractual tenancy."
Bank of India v. Karnam Ranga Rao, AIR 1986 Karn. 242 wherein it was held as follows:
"Banks are bound to follow the directives or circulars issued by the Reserve Bank, prescribing the structure of interest to be charged on loans and any interest charged by Banks in excess of the prescribed limit would be illegal and void. Banks cannot charge compound interest with quarterly rests on agricultural advances."
State Bank of India v. Yumnam Gouramani Singh, wherein it was held when the entries of the book of accounts produced by the Bank corroborated with the evidence by the Branch Manager and other Bank Officials, are sufficient to charge the debtor with liability.
30. The Supreme Court of India in the case of Corporation Bank v. D.S.Gowda, while affirming the decision rendered by the High Court of Karnataka in the case of Karnam Ranga Rao (17 cite supra), held as follows:
"Banking Regulation Act, 1949 - Sections 21 and 35- Circulars/directions issued by Reserve Bank under, regarding interest with periodical rests chargeable by Banks from borrowers - Held, based on rational policy - Have statutory force - Banks bound to follow them unless declared to be illegal and unreasonable."
31. Thus contending, Sri Suryanarayana Murthy requested to allow the appeals and to dismiss cross-appeal or in the alternative, in the event of eviction, to grant six months time to vacate the premises.
32. Sri Vilas V. Afzalpurkar, the learned Counsel appearing for the Hotel submits as follows while assailing the judgment of the Court below:
According to him, the eviction ordered is a just one and the same is result of proper appreciation of evidence. The Trial Court considering the nature of evidence available, scope of Sections 53-A, 106 and 107 of the T.P.Act, right in holding that the tenancy is a monthly one and its termination is valid.
33. The Trial Court while granting eviction should have ordered for mesne profits as claimed by the hotel. When entire requisite material was available,there was no necessity to hold a separate enquiry under Order 26 (sic. 20) Rule 12 of the C.P.C.
34. According to the learned Counsel, Section 53-A of the T.P.Act does not come to the aid of the Bank as the bank did not make out a case of written lease deed. The Bank failed to establish that it discharged its obligation under the disputed agreement. Though the Bank agreed to recover the loan amount from out of the monthly rents within a period of 5 years, the Bank gave a go-by to the said agreed terms, and thereby Exs.A-18, A-19 and B-5 in no way helpful to the Bank. The decisions relied upon by the Bank in Sivarama Krishnayya's case and Kapur Chand's case (12th and 13th cited supra), which dealt with Sections 53-A, 106 and 107 of the T.P.Act are again in no way helpful to the Bank as the facts involved therein are entirely different to that of the facts on hand. The learned Counsel also submits that the notice issued under Section 106 of the T.P.Act is quite just and proper.
35. Regarding the quantum of mesne profits, the learned counsel drew our attention to the evidence of P.Ws.6, 7, 8 and 9 and also D.Ws. 2 and 4, who spoke about the rents being paid in respect of other premises situated in the same locality and also in respect of other premises situated in the vicinity of the schedule premises. The learned Counsel also submits that even if the admitted lease period was for 15 years from 1-1-1978, the same would have come to an end by 31-12-1993. Thus,the Bank was not entitled to continue in the schedule premises beyond 31-12-1993. 45
36. The grievance of the learned Counsel for the Hotel in the Cross-Appeal filed challenging the decree and judgment in O.S.No. 44 of 1983 is that the Trial Court committed mistake in ordering past mesne profits at the rate of Rs. 15,000/- per month and future mesne profits only at Rs. 10/- per square foot instead of Rs. 15/- per square foot. He maintained that if the Trial Court had taken into consideration the location of the schedule premises and the prevailing rent in respect of similar buildings situated round about the schedule premises, its findings would have been that the hotel is entitled for mesne profits as claimed in the suit.
37. To support his contentions, Sri Afzulpurkar placed reliance on the following decisions:
Satish Chand v. Govardhan Das, wherein the Supreme Court held as follows:
"Ordinarily a suit is tried in all its stages on the cause of action as it existed on the date of the institution, but the Court can look into subsequent events when the relief claimed originally has (1) by reason of subsequent change of circumstances become inappropriate, or (2)where it is necessary to take notice of the changed circumstances to shorten litigation, or (3) to do complete justice between the parties. None of these requirements to attract the power of the Court under Order VII Rule 7 of the CPC is present. There is nothing to show that the original relief claimed for, had, by reason of subsequent change of circumstances, become inappropriate, or that it was necessary to have the decision of the Court on the altered circumstances in order to shorten litigation or to do complete justice between the parties....
We have no doubt in our mind that the defendants were tenants holding over under Section 116 of the T.P.Act and therefore it was necessary for the plaintiffs to serve a notice under Section 106 of the Act. Where a person holds over under an unregistered lease and continues in possession by paying the monthly rent, the holding over must be held as a tenancy from month to month(Mulla's Transfer of Property Act, 5th Edn.p.762). It was definitely wrong on the part of the High Court to have proceeded on the assumption that the lease was for a specific term of nine years and therefore the lease stood determined by efflux of time under Section 111(a) of the T.P.Act, and that the defendants were tenants at sufferance and no quit notice was required."
Sudarshan Trading Co. Ltd., v. L.D'Sonza, AIR 1984 Karn. 214 wherein it was held as follows:
"If, after the expiry of the period of lease or after its determination, a tenant merely holds over without the landlord's consent there is no tenancy of any kind at all. If in such case, the tenant continues in possession without landlord's consent he becomes what in English Law is called a 'tenant by sufferance'. This is really no tenancy at all in the strict sense and requires no notice to determine it, the expression being. merely a fiction to avoid the continuance of possession operating as a trespass. It is different from the concept of a tenancy at will which arises by implication of law in certain cases of permissive possession. No notice is necessary to terminate a tenancy at sufferance. But the case of tenancy by holding-over is different and is governed by the provisions of Section 116 of the T.P.Act. Tenancy by holding-over is a creature of a bilateral consensual act and does not come into existence by a mere unilateral intendment or declaration of one of the parties."
38. Thus, he urged that the Cross-Appeal be allowed and the judgment and decree passed by the Trial Court in O.S.No. 44/83 in so far as it relates to granting of mesne profits of Rs. 1,20,000/- is to be modified increasing the mesne profits to Rs. 35,000/- per month at the rate of Rs. 15/- per square foot which works out to Rs. 40,19,250/- from the date of suit till the date of decree i.e., for 9 years 81/2 months. Since the Trial Court granted mesne profits at Rs. 23,000/- per month which works out to Rs. 26,79,000/-, the hotel now claims Rs. 13,39,750/- being the difference.
39. Having regard to the averments of both sides, the evidence given both oral and documentary, the findings of the Trial Court on each and every issue framed by it in all the suits and the contentions raised by both sides for and against the judgment and decree of the Court below, the following points will arise for consideraion in these appeals and cross-appeal.
(1) Whether the Court below, when decreed the suits filed by the bank for recovery of Rs. 2,00,000/- and Rs. 3,00,000/- is right in ordering simple interest at 15% per annum? 25 (2) Whether the eviction ordered by the Court below and awarding of mesne profits is just and proper?
40. In order to consider the above points, it is proper for this Court to once again appreciate the evidence and weigh the same with the averments made. Regarding relationship between the parties there is no dispute. There is no dispute as to the execution of Exs.A-16 to A-19 and A-21. Also there is no dispute as to advancing of Rs. 2,00,000/- and Rs. 3,00,000/- by the Bank to the Hotel. It has also come in evidence that the schedule premises was remodelled by constructing a strong room and making other improvements to suit to the specification of the Bank. The controversy is whether the lease and loan were co-related and co-terminus or separate and distinct. A strict scrutiny of both oral and documentary evidence made us to reach the conclusion that the transaction between the parties co-related and co-terminus. They were not separate and independent transactions, which position is clear from the evidence of P.W.4 Shri Ramesh, who deposed that the loans were advanced for the purpose of construction of strong room and for purchasing of furniture and fixtures. The Trial Court is right in drawing adverse inference against the Bank with regard to the way in which the documents namely, Exs.A-1 to A-7, were prepared. The same is supported from the averments made in the plaint and admission of PW-2-Major Singh, who deposed that there was no regular lease deed in writing and registered. It has come in the evidence that the Bank was not regular in payment of rents. Further, the draft lease deed was not approved by the Hotel. The correct evaluation of the evidence made us to reach the conclusion that the Bank though proved the execution of two loan agreements but it is entitled to claim simple interest only at 15% per annum and not more than that. This finds support from the evidence of P.W.2-Major Singh, who admitted that the interest agreed was 15% simple interest without periodical rests. The decisions relied upon by Shri Suryanarayana Murthy in Bank of India (17 cited supra); State Bank of India (18 cited supra) and Corporation Bank (19 cited supra) are not applicable as the Hotel never disputed the amount advanced. Further the interest claimed by the Bank is not authorised by the agreement. Lastly, the transaction is not an agricultural loan. The Trial Court is justified in decreeing the suits granting 15% simple interest per annum.
Hence point No. 1 is answered accordingly.
41. Before making observations on the second point, it is proper to understand properly the effect of Section 53-A, 106 and 107 of the T.P.Act.
53-A. Part performance:- Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty:
and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
106. Duration of certain leases in absence of written contract or local usage:
In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from, year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of tenancy.
Every notice under this section must be in writing signed by or on behalf of the person giving it and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family members or servants, at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property."
107. Leases how made: A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompained by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession."
42. Regarding eviction, from the evidence of the Bank itself, it is clear that there was no written lease agreement. It is true that even in the absence of a written agreement if other material is placed by the tenant and other surrounding circumstances convincing in nature, it can be construed that the lease is for a particular period. But, in the instant case, no such evidence is forthcoming except the oral evidence of the interested witnesses of the Bank, which evidence is quite contradictory and inconsistent. In addition to this, the conduct of the Bank in instituting the suits for recovery of the amounts within five years period goes to show that though earlier it was the intention of the Bank to have the premises on lease for 15 years viz., first for a period of five years and then with two renewals of five years each, later it gave up that idea and sought to recover the amount from the hotel. From this, it can be inferred that the Bank had decided to vacate the premises though it had not informed to the Hotel. The Hotel was right in seeking eviction of the Bank as the Bank started adjusting the rents towards the loans advanced without noticing that the loan advanced was to remodel the building to suit the Bank's specification. If the Bank wanted to continue in possession, it would not have resorted to adjust the rents towards the loans advanced to the hotel. On the other hand, it would have demanded the hotel to repay the amount.
43. In the absence of written agreement, issuing of termination notice under Section 106 of the T.P.Act was a just one and terminating tenancy under Section 107 of the T.P.Act was a valid one. The evidence made us to hold breach of agreement if any was at the instance of the Bank and not the Hotel. Thus, the Bank was not ready and willing to perform its part of the agreement. As such the Bank is not entitled to plead equity or to invoke the benefit conferred under Section 53-A of the T.P.Act.
44. The decisions cited by the Bank (1 to 11 cited supra)before the Trial Court are not applicable, as in all those cases, there were written agreements. Evidence available in the above cases disclosed the existence of circumstances which were sufficient to infer that the lease therein a permanent one. In fact the trial Court went through all the above decisions very carefully and came to a right conclusion that on facts the same are not applicable to the case on hand.
45. Even the decision in Sivaramakrishnayya's case (12 supra), on which the learned Counsel for the Bank placed reliance on presumption as to execution of a document and the applicability of Section 53-A, 106 and 107 of the T.P. Act, is not applicable for the reason that the circumstances explained rebutted the presumption as to the execution of the lease agreement. On the other hand, the circumstances existing in these appeals lead us to the conclusion that there was no valid registered lease agreement. Hence, the lease has to be construed as one of monthly tenancy and its termination by giving 15 days eviction notice sufficient. Thus, the second limb of Sections 106 and 107 of the T.P.Act are complied with by the Hotel.
46. M. Annapurnaiah's case (15 supra) and Chander Kali's case (16 supra) cannot be attracted as here the eviction of the Bank was sought by the Hotel through Court instead of driving out the Bank forcibly.
47. Metal Press Works, Calcutta's case (14 supra) is not helpful to the Bank as at no time the Hotel-landlord consented for the Bank's continuance as a tenant.
48. Kapur Chand's case (13 supra) is of no avail as neither the Hotel accepted the rents after quit notice nor waived its right to seek eviction. On the other hand, the Hotel immediately after terminating the tenancy filed a suit for eviction and mesne profits. In fact, decisions cited by Shri Vilas Afzulpurkar i.e. Sudarshan Trading Co. Ltd.'s case (21 supra) and Satish Chand's case (20 supra) more appropriate to the facts of the case on hand.
49. Thus the eviction of the schedule premises is a just one and the Hotel being its lawful owner entitled for recovery of its peaceful possession. In our view the reasoning adopted by the Trial Court to reach this conclusion is a correct one and needs no interference of this Court.
50. Regarding claim for mesne profits payable by the Bank to the Hotel, which includes both past and future mesne profits concerned, the Hotel had claimed past mesne profits at Rs. 15,000/- per month and future mesne profits at the rate of Rs. 15/- per square foot. When once it is held that termination of the tenancy was valid, its continuation of possession of the schedule premises by the Bank for the period subsequent to termination of tenancy, the landlord of the premises is entitled for mesne profits.
51. Number of the witnesses were examined both on behalf of the Bank and the Hotel to determine the mesne profits. PW4-S.Ramesh, an officer of the Bank stated on oath that there is a branch office of Andhra Bank at M.G.Road at a distance of about 50 yards from the Banks. The same is on the same side of the road. Earlier they were paying rent at Rs. 3.75 ps. per square foot. Recently, the said branch has been shifted to a bigger premises. He admitted the existence of Srinath complex just opposite to the Bank. They are paying rent at Rs. 8/- per square foot for the said complex. He stated that one Kumar Metrological Office has taken the premises at Rs. 4/- per square foot for three years. He admitted in his cross-examination that the said office is located on the third floor. He further deposed that apart from the rent of Rs. 4/- per square foot, the said Kumar Metrological Office is paying 20 maintenance charges. But he is unable to say how much maintenance the said Metrological Office has been paying. Even though he is an officer of the Bank, he was unable to say how much rent they are paying to their branch extension counter in Hotel Deccan continental which consists of only one room. P.W.7 is one Adarsh Kumar Mudgel. He was the Manager of State Bank of Travancore, Secunderabad. According to him, the said bank is located on the first floor which is at a distance of 200 yards from the suit premises. He stated that Travancore Bank was paying Rs. 3.50 ps. per sq. foot previously and now they are paying rent at Rs. 4.30 ps. per sq. foot. He also admitted that after expiry of the period of five years, the said bank has been enhancing rent at 25% annually. In the cross-examination, he was unable to answer what is the rent being paid in respect of ground floor of the same building in which the suit bank is located. P.W.8, V.Srinivasa Murthy, was the Sub-Manager of the Andhra Bank located in the first floor of the premises wherein they put up a branch office which is about 150 yards away from the schedule premises. He stated that their bank is paying Rs. 3.75 ps. per sq. foot per month as rent. The said premises is situated in the first floor with stair-case of 3 feet width. There is no parking place in the front side of the building. He admitted that the other portion in the area being made use for car parking etc. For the said area a separate rent deed was executed fixing Rs. 3.75 ps. per sq. foot per month. The said branch also paid Rs. 1,05,006/- to the landlord which was interest free with an understanding that the same shall be adjusted in the rents of the last months. The said lease deed contains enhancement clause of 25% for every five years as mentioned in Ex.A-28. PW-9 is the officer of the Bank at M.G.Road. He stated that they occupied a premises in the year 1966 fixing the rent at the rate of Rs. 1,500/- per month. As on the date of his deposition they were paying rents at Rs. 7,169/- per month. He stated the above by making reference to Ex.A-34.
52. D.W.2. on Mr. Shamshuddin Ahmed. He is a registered Valuer and Chartered Engineer. He gave his report at Ex. B-14 mentioning the rate of rents assessed pursuant to G.O.Ms. No. 1302 dated 18-5-1982. He assessed the prevailing rent in respect of the schedule premises at Rs. 15/- per Sq. foot per month. To arrive at this figure he gave figures of various premises with shop numbers and other particulars in his report. He deposed that for their own building the Municipality is demanding rent at Rs. 10/- per sq. foot. D.W.4 is one Nageswara Rao, Manager of Garden Silk Mills Ltd., which is having its premises in the Hotel-Asrani for selling their cloths. They are there for a considerable period. He stated that the area in their occupation is almost equal to the schedule premises. He also stated that for an area of 750 sq. feet they had agreed to pay Rs. 1,500/- per day. D.W.5 is one Saleel Khadri, Manager of the Hotel. He supported the statement of D.W.4 by producing Exs.B-16 to 13-29 which were counter-foil receipts issued to M/s. Garden Silk Mills Ltd., for the premises in their occupation. He also produced xerox copies of certain 20 lease deeds in respect of Swapna Lok Complex, Surya Kiran Complex situated in the vicinity of the suit schedule premises and the rent paying at Rs. 12/- per sq. foot per month. He deposed that the Punjab and Sind Bank has its extension counter in M/s. Deccan Continental Hotel taken on lease at Rs. 8/- per sq. foot in the year 1978 with an increase of 10% each year as evidenced in the letter dated 8-6-1978. The said extension counter has only one room.
53. The Trial Court taking into consideration the location of various premises, age of the building, accommodation available including the fact that bank itself is paying Rs. 12/- per sq. foot per month in respect of its extension counter consisting of one room situated in Deccan Continental Hotel held that when the rent for single room situated in M/s. Deccan Continental Hotel was Rs. 8/- per sq. foot in the year 1978 with a condition to increase it by 10% every three years, the same will be Rs. 8.80 ps. in 1981; Rs. 9.70 ps. in the year 1984; in 1987 it will be Rs. 10.67 ps. and in 1990 it will be Rs. 12/- per sq. yard (sic. sq. foot). Thus, it held that future mesne profits can safely be assessed at Rs. 10/- per square foot. Whereas past mesne profits from the date of termination of tenancy i.e., from December, 1980 till the date of filing of suit at Rs. 15,000/- per month will be at Rs. 7-50 ps. per square foot. When the Bank is paying Rs. 12/- per square foot for its extension counter consists of one room, whereas D.W.2 a Registered Valuer making reference to the relevant factors assessed that the rate of rent for the schedule premises at Rs. 15/- per square foot, the trial Court is not justified in ordering the future mesne profits to the schedule premises at Rs. 10/- per square foot per month. The future mesne profits should have been between Rs. 12/- and Rs. 15/- per square foot. We feel that future mesne profits to the schedule premises at Rs. 13/- per square foot per month is just and reasonable. The trial Court rightly decreed the suit for eviction of the Bank but the mesne profits awarded by it is modified as indicated in this judgment. Point No. 2 is answered accordingly.
54. Hence, the Cross-Appeal filed by the Hotel is allowed in part ordering the past (sic. future) mesne profits at Rs. 13/- per square foot per month.
55. On reappreciation of entire evidence including strict scrutiny of the principles laid down in some of the decisions cited, we feel there is no merit in the contentions raised by the Bank. As such the appeals filed by the Bank are liable to be dismissed and accordingly they are dismissed. The Hotel is held entitled for eviction of the Bank from the suit schedule premises and recover its possession with past and future mesne profits as determined supra. While decreeing the suit for eviction, the Trial Court had granted three months time to the Bank to vacate the premises. The decree was made on 16-4-1991. But the Bank by virtue of stay granted by this Court was able to continue in possession of the schedule premises upto this date. In our view the Hotel is entitled to recover possession immediately. At the same time, the Bank is also entitled to have a little time to vacate the schedule premises. Sri Suryanarayana Murthy, the learned Counsel for the Bank, stated that minimum six months time to vacate the premises be granted. On behalf of the Appellant Bank, an affidavit sworn by one Mr. Gurbax Singh, Branch Manager of the Bank is filed requesting for six months time to vacate in case eviction is upheld without prejudice to Bank's right to appeal to the Hon'ble the Supreme Court. Shri Vilas Afzal Purkar, the learned Counsel for the Hotel very vehemently opposed to grant any time to vacate the premises. However, taking into consideration the hardship pleaded by Sri Suryanarayana Murthy time till the end of February, 1998 is granted to the Bank to vacate and put the Hotel Asrani in vacant possession of the premises. During this period, the Bank shall be regular in payment of rent, shall not sub-lease the premises and shall not damage the premises.
56. Hence, the order reads as follows:
The counter interest claimed by the Hotel Asrani Private Limited in O.S.No. 49/83 which was ordered by the trial Court and attacked by the Bank in CCCA No. 10 of 1992, it is held that the Hotel is not entitled for the same. Hence CCCA No. 10 of 1992 is dismissed with the above modification. Whereas CCCA No. 51 of 1991 and CCCA No. 51 of 1992 filed by the Punjab and Sind Bank are dismissed in toto. Further Cross-Appeal No. 52048 of 1991 filed by M/s. Hotel Asrani, Private Limited Company in CCCA No. 51 /91 is allowed in part ordering the past mesne profits from December, 1980 to July, 1981 at Rs. 15,000/- per month and future mesne profits from the date of suit till realisation at Rs. 13/- per square foot per month.
57. The Bank is given time to vacate the premises an indicated already.
58. In the circumstances, there is no order as to costs.
59. The CCCA No. 10 of 1992 and the CCCA SR No. 53132/91 having been set down for being mentioned on 24-9-1997 pursuant to the Judgment of the High Court dated 12-8-1997 and passed in CCCA No. 51/92 and 10/92 and cross appeal SR No. 52048/91 and upon perusing the said Judgment and upon hearing the above Counsels appearing for the parties concerned the Court on 24-9-1997 delivered the following Judgment:-
Common Order:
60. Learned Counsel for the Petitioners states that he does not want to press both the appeals. Accordingly both the appeals are dismissed as not pressed. There shall be no order as to costs.