M/S.
Atma Ram Properties (P) Ltd. Vs. M/S. Federal Motors Pvt. Ltd [2004] Insc 751
(10 December 2004)
CJI R.C. LAHOTI & G.P. MATHUR [Arising out of S.L.P.(C) No.6415 of 2002] R.C. Lahoti, CJI Leave granted.
The suit premises are non-residential commercial premises admeasuring
approximately 1000 sq. ft. and situated in Connaught Circus, New Delhi. The
premises are owned by the appellant and held on tenancy by the respondent on a
monthly rent of Rs.371.90p. per month. The tenancy had commenced sometime in the
year 1944 and it appears that ever since then the rent has remained static.
Admittedly, the provisions of the Delhi Rent Control Act 1958, (hereinafter
'the Act', for short) are applicable to the premises.
Sometime in the year 1992, the appellant initiated proceedings for the
eviction of the respondent on the ground available under Clause (b) of
sub-Section (1) of Section 14 of the Act alleging that the respondent had
illegally sublet the premises to M/s. Jay Vee Trading Co. Pvt. Ltd. and the
sub- tenant was running its showroom in the premises. Vide order dated
19.3.2002, the Additional Rent Controller, Delhi held the ground for eviction
made out and ordered the respondent to be evicted. The respondent preferred an
appeal under Section 38 of the Act. By order dated 12.4.2001, the Rent Control
Tribunal directed the eviction of the respondent to remain stayed but subject
to the condition that the respondent shall deposit in the Court Rs.15,000/- per
month, in addition to the contractual rent which may be paid directly to the
appellant. The deposits were permitted to be made either in cash or by way of
fixed deposits in the name of the appellant and directed to be retained with
the Court and not permitted to be withdrawn by either party until the appeal was
finally decided. Raising a plea that the respondent could not have been
directed during the pendency of the proceedings at any stage to pay or tender
to the landlord or deposit in the Court any amount in excess of the contractual
rate of rent, the respondent filed a petition under Article 227 of the
Constitution putting in issue the condition as to deposit Rs.15,000/- per month
imposed by the Tribunal. By order dated 12.2.2002, which is impugned herein,
the learned single Judge of the High Court has allowed the petition and set
aside the said condition imposed by the Tribunal. The effect of the order of
the High Court is that during the pendency of appeal before the Tribunal the
respondent shall continue to remain in occupation of the premises subject to payment
of an amount equivalent to the contractual rate of rent. Feeling aggrieved, the
landlord (appellant) has filed this appeal by special leave.
Ordinarily this Court does not interfere with discretionary orders, more so
when they are of interim nature, passed by the High Court or subordinate
Courts/Tribunals. However, this appeal raises an issue of frequent recurrence
and, therefore, we have heard the learned counsel for the parties at length.
Landlord-tenant litigation constitutes a large chunk of litigation pending
in the Courts and Tribunals. The litigation goes on for unreasonable length of
time and the tenants in possession of the premises do not miss any opportunity
of filing appeals or revisions so long as they can thereby afford to perpetuate
the life of litigation and continue in occupation of the premises. If the plea
raised by the learned senior counsel for the respondent was to be accepted, the
tenant, in spite of having lost at the end, does not loose anything and rather
stands to gain as he has enjoyed the use and occupation of the premises, earned
as well a lot from the premises if they are non-residential in nature and all
that he is held liable to pay is damages for use and occupation at the same
rate at which he would have paid even otherwise by way of rent and a little
amount of costs which is generally insignificant.
Shri K. Ramamurthy, the learned senior counsel for the appellant submitted
that once a decree or order for eviction has been passed, the tenant is liable
to be evicted and if he files an appeal or revision and opts for retaining use
and occupation of the premises, he should be prepared to compensate the
landlord by paying such amount as the landlord would have been able to earn in
the event of the premises being vacated and, therefore, the superior court,
passing an order of stay, acts well within its discretionary jurisdiction by
putting on terms the appellant who seeks an order of stay. On the other hand,
Shri Ranjit Kumar, the learned senior counsel appearing for the respondent,
defended the order of the High Court by raising several pleas noticed shortly
hereinafter.
The order of eviction passed by Rent Controller is appealable to the Rent
Control Tribunal under Section 38 of the Act. There is no specific provision in
the Act conferring power on the Tribunal to grant stay on the execution of the
order of eviction passed by the Controller, but sub-Section (3) of Section 38
confers the Tribunal with all the powers vested in a Court under the Code of
Civil Procedure, 1908 while hearing an appeal.
The provision empowers the Tribunal to pass an order of stay by reference to
Rule 5 of Order 41 of the Code of Civil Procedure 1908 (hereinafter 'the Code',
for short). This position was not disputed by the learned senior counsel appearing
for either of the parties.
Sub-Rule (1) and (3) of Rule 5 of Order 41 of the Code read as under:-
"R.5 Stay by Appellate Court (1) An appeal shall not operate as a stay of
proceedings under a decree or order appealed from except so far as the Appellate
Court may order, nor shall execution of a decree be stayed by reason only of an
appeal having been preferred from the decree; but the Appellate Court may for
sufficient cause order stay of execution of such decree.
Xxx xxx xxx xxx (3) No order for stay of execution shall be made under
sub-rule (1) or sub-rule (2) unless the court making it is satisfied ___ (a)
that substantial loss may result to the party applying for stay of execution
unless the order is made;
(b) that the application has been made without unreasonable delay; and (c)
that security has been given by the applicant for the due performance of such
decree or order as may ultimately be binding upon him.
xxx xxx xxx xxx" It is well settled that mere preferring of an appeal
does not operate as stay on the decree or order appealed against nor on the
proceedings in the court below. A prayer for the grant of stay of proceedings
or on the execution of decree or order appealed against has to be specifically
made to the appellate Court and the appellate Court has discretion to grant an
order of stay or to refuse the same. The only guiding factor, indicated in the
Rule 5 aforesaid, is the existence of sufficient cause in favour of the
appellant on the availability of which the appellate Court would be inclined to
pass an order of stay. Experience shows that the principal consideration which
prevails with the appellate Court is that in spite of the appeal having been
entertained for hearing by the appellate Court, the appellant may not be
deprived of the fruits of his success in the event of the appeal being allowed.
This consideration is pitted and weighed against the other paramount
consideration: why should a party having succeeded from the Court below be
deprived of the fruits of the decree or order in his hands merely because the
defeated party has chosen to invoke the jurisdiction of a superior forum. Still
the question which the Court dealing with a prayer for the grant of stay asks
to itself is: Why the status quo prevailing on the date of the decree and/or
the date of making of the application for stay be not allowed to continue by
granting stay, and not the question why the stay should be granted.
Dispossession, during the pendency of an appeal of a party in possession, is
generally considered to be 'substantial loss' to the party applying for stay of
execution within the meaning of clause (a) of sub-rule (3) of Rule 5 of Order
41 of the Code.
Clause (c) of the same provision mandates security for the due performance
of the decree or order as may ultimately be passed being furnished by the
applicant for stay as a condition precedent to the grant of order of stay.
However, this is not the only condition which the appellate Court can impose.
The power to grant stay is discretionary and flows from the jurisdiction
conferred on an appellate Court which is equitable in nature. To secure an
order of stay merely by preferring an appeal is not the statutory right
conferred on the appellant. So also, an appellate Court is not ordained to
grant an order of stay merely because an appeal has been preferred and an
application for an order of stay has been made. Therefore, an applicant for
order of stay must do equity for seeking equity. Depending on the facts and
circumstances of a given case an appellate Court, while passing an order of
stay, may put the parties on such terms the enforcement whereof would satisfy
the demand for justice of the party found successful at the end of the appeal.
In South SCC 648, this Court while dealing with interim orders granted in
favour of any party to litigation for the purpose of extending protection to
it, effective during the pendency of the proceedings, has held that such
interim orders, passed at an interim stage, stand reversed in the event of the
final decision going against the party successful in securing interim orders in
its favour; and the successful party at the end would be justified in demanding
compensation and being placed in the same situation in which it would have been
if the interim order would not have been passed against it. The successful
party can demand (a) the delivery to it of benefit earned by the opposite party
under the interim order of the High Court, or (b) compensation for what it has
lost, and to grant such relief is the inherent jurisdiction of the Court. In
our opinion, while granting an order of stay under Order 41 Rule 5 of the CPC,
the appellate court does have jurisdiction to put the party seeking stay order
on such terms as would reasonably compensate the party successful at the end of
the appeal in so far as those proceedings are concerned. Thus, for example,
though a decree for payment of money is not ordinarily stayed by the appellate
Court, yet, if it exercises its jurisdiction to grant stay in an exceptional
case it may direct the appellant to make payment of the decretal amount with
interest as a condition precedent to the grant of stay, though the decree under
appeal does not make provision for payment of interest by the judgment-debtor
to the decree-holder. Robust commonsense, common knowledge of human affairs and
events gained by judicial experience and judicially noticeable facts, over and
above the material available on record - all these provide useful inputs as
relevant facts for exercise of discretion while passing an order and
formulating the terms to put the parties on. After all, in the words of Chief
Justice Chandrachud, speaking for the Constitution Bench in Ors. (1985) 3 SCC
545, - "commonsense which is a cluster of life's experiences, is often
more dependable than the rival facts presented by warring litigants".
Shri Ranjit Kumar, the learned senior counsel for the respondent, submitted
that during the pendency of the appeal the tenant-appellant cannot be directed
to pay any amount over and above the amount of contractual rent unless and
until the decree or order of eviction has achieved a finality because, in view
of the protection of rent control legislation enjoyed by the tenant, he shall
continue to remain a tenant and would not become a person in unlawful possession
of the property until the decree has achieved a finality from the highest forum
upto which the litigation is pursued. Reliance was placed on the decision of
Singh Thakur & Anr., (1977) 4 SCC 402, followed in Vashu the following two
issues:- (i) in respect of premises enjoying the protection of rent control
legislation, when does the tenancy terminate; and (ii) upto what point of time
the tenant is liable to pay rent at the contractual rate and when does he
become liable to pay to the landlord compensation for use and occupation of the
tenancy premises unbound by the contractual rate of rent? Under the general
law, and in cases where the tenancy is governed only by the provisions of Transfer of
Property Act, 1882, once
the tenancy comes to an end by determination of lease under Section 111 of the Transfer of
Property Act, the right of the tenant to continue in possession of the
premises comes to an end and for any period thereafter, for which he continues
to occupy the premises, he becomes liable to pay damages for use and occupation
at the rate at which the landlord could have let out the premises on being
vacated by the tenant. In the case of Chander Kali Bai & Ors. (supra) the
tenancy premises were situated in the State of Madhya Pradesh and the
provisions of the M.P. Accommodation Control Act, 1961 applied. The suit for
eviction was filed on 8th March 1973 after serving a notice on the tenant
terminating the contractual tenancy w.e.f. 31st December 1972. The suit came to
be dismissed by the trial Court but decreed in first appeal decided on 11th August,
1975. One of the submissions made in this Court on behalf of the
tenant-appellant was that no damages from the date of termination of the
contractual tenancy could be awarded; the damages could be awarded only from
the date when an eviction decree was passed. This Court took into consideration
the definition of tenant as contained in Section 2(i) of the M.P. Act which
included "any person continuing in possession after the termination of his
tenancy" but did not include "any person against whom any order or
decree for eviction has been made". The court, persuaded by the said
definition, held 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 M.P. Act and on such termination his possession does not become
wrongful until and unless a decree for eviction is passed.
However, the Court specifically ruled that the tenant continuing in
possession even after the passing of the decree became a wrongful occupant of
the accommodation. In conclusion the Court held that the tenant was not liable
to pay any damages or mesne profits for the period commencing from 1st January
1973 and ending on 10th August 1975 but he remained liable to pay damages or
mesne profits from 11th August 1975 until the delivery of the vacant possession
of the accommodation. During the course of its decision this Court referred to
a decision of Kamlakar, 1974 MPLJ 485, wherein the High Court had held that if
a person continues to be in occupation after the termination of the contractual
tenancy then on the passing of the decree for eviction he becomes a wrongful
occupant of the accommodation since the date of termination. This Court opined
that what was held by the Madhya Pradesh High Court seemed to be a theory akin
to the theory of "relation back" on the reasoning that on the passing
of a decree for possession, the tenant's possession would become unlawful not
from the date of the decree but from the date of the termination of the contractual
tenancy itself. It is noteworthy that this Court has not disapproved the
decision of the Madhya Pradesh High Court in Kikabhai Abdul Hussain's case but
distinguished it by observing that the law laid down in Kikabhai Abdul
Hussain's case was not applicable to the case before it in view of the
definition of 'tenant' as contained in the M.P. Act and the provisions which
came up for consideration of the High Court in Kikabhai Abdul Hussain's case
were different.
Reliance, by the learned counsel for the respondent, on the case of Vashu
Deo (supra) is misconceived, inasmuch as, in that case the Court was dealing
with the rule of estoppel of tenant for holding that the tenant was estopped
from disputing the title of his landlord so long as he continued in possession
of the tenancy premises and until he had restored the landlord into possession.
393, this Court has upheld the principle that the tenant continuing in
occupation of the tenancy premises after the termination of tenancy is an
unauthorized and wrongful occupant and a decree for damages or mesne profits
can be passed for the period of such occupation, till the date he delivers the
vacant possession to the landlord. With advantage and approval, we may refer to
a decision of the Nagpur High Court. In learned Chief Justice of Nagpur High
Court held that the rent control order, governing the relationship of landlord
and tenant, has no relevance for determining the question of what should be the
measure of damages which a successful landlord should get from the tenant for
being kept out of the possession and enjoyment of the property. After
determination of the tenancy, the position of the tenant is akin to that of a
trespasser and he cannot claim that the measure of damages awardable to the
landlord should be kept tagged to the rate of rent payable under the provisions
of the rent control order. If the real value of the property is higher than the
rent earned then the amount of compensation for continued use and occupation of
the property by the tenant can be assessed at the higher value. We find
ourselves in agreement with the view taken by the Nagpur High Court.
Placing reliance on the decision of this Court in SCC 359, Shri Ranjit
Kumar, the learned senior counsel submitted that the decree of trial Court
merges in the decree of the appellate Court and, therefore, the tenant shall
continue to remain a tenant (and shall not become an unlawful occupant), until
the passing of decree by the highest Court because the decree would achieve a
finality only when the proceedings have finally terminated and then the decree
of trial Court shall stand merged in the decree of the appellate Court, the
date whereof only would be relevant for determining the nature of occupation of
the tenant. We are not impressed.
In Kunhayammed & Ors. (supra), this Court, on an elaborate discussion of
the available authorities, held that once the superior Court has disposed of
the lis before it either way, i.e. whether the decree or order under appeal is
set aside or modified or simply confirmed, it is the decree or order of the
superior Court, Tribunal or authority which is the final, binding and operative
decree or order wherein merges the decree or order passed by the court,
tribunal or the authority below.
However, this Court has also observed that the doctrine of merger is not of
universal or unlimited application. In spite of merger the actual fact would
remain that it was the decree or order appealed against which had directed the
termination of tenancy with effect from which date the tenant had ceased to be
the tenant, and the obligation of the tenant to deliver possession over the
tenancy premises came into operation though the same remained suspended because
of the order of stay.
We are, therefore, of the opinion that the tenant having suffered a decree
or order for eviction may continue his fight before the superior forum but, on
the termination of the proceedings and the decree or order of eviction first
passed having been maintained, the tenancy would stand terminated with effect from
the date of the decree passed by the lower forum. In the case of premises
governed by rent control legislation, the decree of eviction on being affirmed,
would be determinative of the date of termination of tenancy and the decree of
affirmation passed by the superior forum at any subsequent stage or date, would
not, by reference to the doctrine of merger have the effect of postponing the
date of termination of tenancy.
In the Delhi Rent Control Act 1958, the definition of 'a tenant' is
contained in clause (l) of Section 2. Tenant includes 'any person continuing in
possession after the termination of his tenancy' and does not include 'any
person against whom an order or decree for eviction has been made'. This
definition is identical with the definition of tenant dealt with by this Court
in Chander Kali Bai & Ors. case (supra). The tenant-respondent herein
having suffered an order for eviction on 19.3.2001, his tenancy would be deemed
to have come to an end with effect from that date and he shall become an unauthorized
occupant.
It would not make any difference if the order of eviction has been put in
issue in appeal or revision and is confirmed by the superior forum at a latter
date. The date of termination of tenancy would not be postponed by reference to
the doctrine of merger.
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
tenant-appellant 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
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
tenant-appellant 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.
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.
To sum up, our conclusions are:- (1) while passing an order of stay under
Rule 5 of Order 41 of the Code of Civil Procedure, 1908, the appellate Court
does have jurisdiction to put the applicant on such reasonable terms as would
in its opinion reasonably compensate the decree-holder for loss occasioned by
delay in execution of decree by the grant of stay order, in the event of the
appeal being dismissed and in so far as those proceedings are concerned. Such
terms, needless to say, shall be reasonable;
(2) in case of premises governed by the provisions of the Delhi Rent Control
Act, 1958, in view of the definition of tenant contained in clause (l) of
Section 2 of the Act, the tenancy does not stand terminated merely by its
termination under the general law; it terminates with the passing of the decree
for eviction. With effect from that date, the tenant is liable to pay mesne
profits or compensation for use and occupation of the premises at the same rate
at which the landlord would have been able to let out the premises and earn
rent if the tenant would have vacated the premises.
The landlord is not bound by the contractual rate of rent effective for the
period preceding the date of the decree;
(3) the doctrine of merger does not have the effect of postponing the date
of termination of tenancy merely because the decree of eviction stands merged
in the decree passed by the superior forum at a latter date.
In the case at hand, it has to be borne in mind that the tenant has been
paying Rs.371.90p. rent of the premises since 1944. The value of real estate
and rent rates have skyrocketed since that day. The premises are situated in
the prime commercial locality in the heart of Delhi, the capital city. It was
pointed out to the High Court that adjoining premises belonging to the same
landlord admeasuring 2000 sq. ft. have been recently let out on rent at the
rate of Rs.3,50,000/- per month.
The Rent Control Tribunal was right in putting the tenant on term of payment
of Rs.15,000/- per month as charges for use and occupation during the pendency
of appeal. The Tribunal took extra care to see that the amount was retained in
deposit with it until the appeal was decided so that the amount in deposit
could be disbursed by the appellate Court consistently with the opinion formed
by it at the end of the appeal. No fault can be found with the approach adopted
by the Tribunal. The High Court has interfered with the impugned order of the
Tribunal on an erroneous assumption that any direction for payment by the
tenant to the landlord of any amount at any rate above the contractual rate of
rent could not have been made.
We cannot countenance the view taken by the High Court. We may place on
record that it has not been the case of the tenant- respondent before us, nor
was it in the High Court, that the amount of Rs.15,000/- assessed by the Rent
Control Tribunal was unreasonable or grossly on the higher side.
For the foregoing reasons, the appeal is allowed. The order of the High
Court is set aside and that of the Tribunal restored with costs incurred in the
High Court and in this Court.
However, the tenant-respondent is allowed six weeks' time, calculated from
today, for making deposits and clearing the arrears upto the date consistent
with the order of the Rent Control Tribunal.
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