What emerge from these are:-
(a) The basic burden lies upon the landlord to prove and support his case of reasonable compensation/ mesne profits. He must put on record material documents/ along with the affidavit to support his case of enhanced compensation. The material if placed by the landlord / Licensor / Owner, the Court needs to consider the said material by giving full opportunity to the tenant / Licensee / Occupant / trespasser / obstructionists. Keeping in mind the effect of valuation or architecture's report / opinion and its validity being expert's opinion, which can be subjected to challenge from other side, if case is made out. (Jawajee Nagnatham Vs. Revenue Divisional Officer, Adilabad, A.P. & Ors., (1994) 4, S.C.C. 595.).
595.)
(b) The valuation report / opinion may be at least one of the government recognized valuer, apart from private valuer report, if any. Both the parties are free to ( 13 )
submit their material on the record to support their case through their respective affidavits. (The Special Land Acquisition Officer Vs. Sri Siddappa Omanna Tumari & Ors., A.I.R. 1995 S.C.840).
(c) The Court also needs to consider the principle of Order 20 Rule 12 of the C.P.C. while determining this ad-interim compensation/ mesne profits. The Court also needs to keep in mind as observed in Para 8 in Atma Ram (supra) "quantified by this Court in this order, is only a tentative opinion formed by the Court on the basis of material made available for the parties".
(d) The Court, needs to consider and take note of (i) the Rent Control Legislation, governing the particular premises/ residential or non-residential. (ii) the Location/ area of the premises (iii) the age/ nature of construction of the building/premises (iv) the facilities in the premises and outside the premises, advantages and disadvantages (v) the market value and the rental value of the premises based on architecture / expert / valuation reports / opinion (vi) other instances of the rent / license fees of similarly situated premises (vii) the date of termination of the tenancy / license.
(e) The Court also needs to consider that the compensation was awarded as condition precedent should not be oppressive and unreasonable which in a given case, if tenant failed to pay, has no option but to ( 15 )
suffer the execution of a decree, as observed by the Apex Court. Niyas Ahmed (supra).
(supra) The user and the use
of the premises are also material.
(f) The market value changes with time. The stamp duty is also changes accordingly. The rent/ license fee/ compensation so fixed at the interim period, based upon the market value may in a given case needs to be changed or re-fixed if case is made out. It may go up or go down if market value changes drastically.
(g) One cannot overlook that at the time of basic agreement, both the parties mutually agreed to the particular rent/ Leave license fee irrespective of valuation of the property. Now, when the Court fixes the compensation/ license fee, after termination of the tenancy, there is no question of any agreed rent or compensation. The Court decides the same based upon the material available/ placed on the record read with other various factors as referred in the Judgment.
(h) One important aspect is that the Court, after giving opportunities to both the parties, needs to decide the interim and urgent issue of grant of provisional fair and reasonable compensation/occupation charges, based ( 16 )
upon authenticated material produced on the record, pending the Appeal, summarily. There is no question of detail trial, but it is an essential condition precedent to grant stay of the eviction decree/order on the footing of Order 41, Rule 5 of Civil Procedure Code. The final decision of the appeal should be uninfluenced by such tentative figure / order. Such provisional payment should be condition precedent but it is always adjustable. The amount so fixed in such proceedings is tentative figure. Such interim order/ payment is always subject to the final result of the appeal.
(i) The cases governing the leave and licence agreement as contemplated under the Mah. Rent Act need to be decided on the basis of the provisions of the Mah. Rent Act, as it provides and empowers the Competent Authority to pass an appropriate order that licensee, after expiry of leave and licence agreement, to pay double the agreed compensation/licence fee, pending the application for eviction. But there is no provision of such double licence fee pending the Appeal under the Mah. Rent Act. Therefore, in such cases in absence of any provision, the Appellate Court may pass appropriate order, considering various factors as referred above. ( 17 )
(j) The cases of trespasser, unauthorised occupant, obstructionist need to be dealt with again on different footing than that of a regular tenant/protected tenant/licensee as they are not governed by the Rent Control Legislation. Such unauthorised or illegal occupants, based upon the material produced on record, after giving opportunity to them may be directed to pay such occupation charges/compensation, pending the Appeal, at the current market rate/ rent which may be determined by the Court, taking note of interest of both the parties.
Bombay High Court
Chandrakant Dhanu vs Sharmila Kapur on 7 January, 2009
Bench: Anoop V.Mohta
Citation:2009(2) MHLJ 243,2009(2) ALLMR73
Heard finally, by consent.
2. The Petitioners-Original Defendant Nos. 2 and 3/tenants have challenged the impugned order dated 30th September, 2008 passed on Exhibit 9 in Appeal No.395 of 2008 in R.A.E.Suit No.975/1640 of 2000 by the Appellate Bench of the Court of Small Causes at Bombay, to the extent of fixing the monthly compensation of the flat at Rs.50,000/- p.m. and directing the Petitioner to pay the same till the disposal of the Appeal.
3. The Petitioners' case is- Prior to 1997-1998, one Laldevi Trust was the owner and the landlord of a building known as "Inder Bhuvan" situated at Pandita Ramabai Road, Mumbai 400 007. The said building consists of the ground and two upper floors.
4. Late F.S.Vakil, the Grandfather of Respondent No.4 was a tenant in respect of Flat No.3 (which was later on numbered as Flat No.2), on the West Side on the First ( 3 )
Floor of the said building. The said flat admeasures about 1000 sq.ft., and consists of two bed rooms, hall, kitchen, dining room and two bath cum W.C. blocks. The said building has no lift facilities nor a compound and/or car parking space.
5. In the month of March, 1963, late F.S.Vakil created leave and licence rights in respect of the said flat in favour of Petitioner No.2, and put him in exclusive possession of the said flat. And since then he along with his brother, Petitioner No.1, and their respective family members are in exclusive use and occupation of the said flat.
6. As per the said Agreement, Petitioner No. 2 initially paid the rent/ license fee of the suit premises to the then landlords, Laldevi Trust upto the period ending June, 1997. Thereafter, on Respondent Nos. 1 to 3 acquiring title to the said Flat, the rent of the suit premises was paid to Respondent Nos. 1 to 3 upto the period ending December, 1998. Thereafter, Respondent No.1 to 3 did not accept the rent when tendered.
7. On 25/10/2000, Respondent Nos. 1 to 3 as the ( 4 )
landlords of the flat filed R.A.E. Suit No.975/1640 of 2000 in the Court of Small Causes, Bombay, against the Respondent No.4 and the Petitioners inter-alia contending that Respondent No.4 being the heir of the Original Tenant had illegally sublet the said flat to the Petitioners and accordingly sought a Decree of eviction under Section 16(1)(e) and (n) of the Maharashtra Rent Control Act, 1999 (for short, "Mah.Rent Act").
8. On 03/10/2001, the Petitioners filed their Written Statement refuting the claims and the contentions of Respondent Nos. 1 to 3 and raised various contentions, both on the facts and the law, and contended that the Petitioners are in exclusive possession of the said flat since March, 1963 and on the Amendment to the erstwhile Bombay Rent Act, 1947, Petitioner No.2 has acquired a status of Deemed Tenant and/or a Protected Licensee and consequently Petitioner No.2 and the members of his family and brother, who are residing with him, are also protected by the Provisions of the Mah. Rent Act. On 24/04/2008, the Trial Court decreed the suit and directed the Petitioners and Respondent No.4 to handover possession of the said flat.
( 5 )
9. On 16/06/2008, being aggrieved by the said Decree, the Petitioners filed Appeal No.395 of 2008 under Section 34 of the Mah. Rent Act. On 23/06/2008, the Petitioners' said Appeal was admitted by the Appellate Bench of the Court of Small Causes. On the same day, the Petitioners preferred Application being Exhibit No.9, for stay of the operation of the eviction Decree passed by the Trial Court. On 29/07/2008, Respondent Nos. 1 to 3 filed their Affidavit in reply to the said stay application. On 16/08/2008, the Petitioners filed their affidavit in re-joinder.
10. On 17/09/2008, Respondent Nos. 1 to 3 prefer an Application for taking on record a report of the Architect dated 12th September, 2008, and inter-alia contended that the said report of the Architect should be considered while determining the market value of the said flat.
11. On 18/09/2008, the Petitioners filed two affidavits opposing the report of Architect to be taken on record and to be considered inter-alia on the ground that the said report was not referred to by the said Respondents in their Affidavit in Reply and that the same was tendered at a belated stage. It was further contended ( 6 )
that in any event the report of architect was not based on any data of instants of rental values in the locality and was simply his opinion and that the said report did not state the basis on which the architect had reached a conclusion with regard to the market value of the said flat. On 30/09/2008, the Appellate Bench of the Court of Small Causes has passed the impugned order.
12. The Appellate Court has power to put any reasonable condition while granting stay of the decree as contemplated under Order 41 Rule 5 of the Code of Civil Procedure (for short, "CPC"). It is observed in G.L.Vigin Vs. K.Shankar (2006) 13, S.C.C., 136 as under:-
"19. Strong reliance has been placed by Mr.Viswanathan on Atma Ram Properties Ltd.
Vs. Federal Motors (P) Ltd. (2005) 1,
S.C.C.705) wherein Lahoti, C.J., speaking
S.C.C.705
for a Division Bench of this Court, opined
that conditions may be imposed by the
revisional court while granting stay. There
is no dispute with regard to the said legal
proposition inasmuch as the court can
exercise such a power in terms of Order 41
Rule 5 of the Code of Civil Procedure or the
provisions akin or analogous thereto."
13. This, therefore, applicable even to all the disputes between the owner/ landlord/ licensor and the tenant/ licensee/ trespasser / obstructionist. It ( 7 )
covers residential or non residential/ Commercial premises. The Court requires the applicant to give security also for the performance of the decree for possession passed against him. Therefore, there is an ample power given to the Court to pass appropriate order or direction while granting stay of execution of eviction decree for possession in respect of premises governed by the Rent Control legislation and or even otherwise.
14. The Apex Court in Atma Ram Properties Ltd. Vs. Federal Motors (P) Ltd. 2005 (3) Bom.C.R.274 (SC) : (2005) 1, S.C.C.705 granted stay on condition to deposit of Rs.15,000/- p.m. by reversing the order passed by the High Court and by restoring the order passed by the lower Appellate Court. The premises involved was non-residential/Commercial premises admeasuring 1000 sq. ft. at Connaught Circus, New Delhi (Prime Commercial locality of New Delhi). The basic tenancy was of 1944 @ Rs.371.90 p.m., adjoining premises belonging to the same landlord admeasuring 2000 sq.ft. were let out on rent at Rs.3,50,000/- p.m. It means, for 1000 sq.fts. the rate would be Rs.1,75,000/-. The relevant para/portion of the Judgment are as under:-
( 8 )
. "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 (Olga
Tellis & Others Vs. Bombay Municipal
Corporation & Others, 1985(2) Bom. C.R.434;
A.I.R. 1986 S.C. 180 : 1985(3) S.C.C.
545."
. "Commonsense which is a cluster of life's experiences, is often more dependable than the rival facts presented by warning litigants."
15. Following the same, the Apex Court in Anderson Wright & Co. Vs. Amar Nath Roy & Ors. (2005) 6 S.C.C. 489,
489 directed the tenant to pay Rs.15/- per sq.ft. for 5678 sq.ft i.e. Rs.85,170/- per month from the date of decree, on application filed by landlord for directing the tenant to pay Rs.1,80,000/- per month. The premises is the commercial premises in prime area of Kolkata. The tenancy is of 1939 @ Rs.853.87 p.m.. Another tenant of 2002, paying rent of Rs.32/- per sq.fts.. A tenant on first floor paying Rs.25/- per sq.ft. and other charges. The Trial Court dismissed the suit. The High Court has decreed the suit. The S.L.P. against the same admitted on 23/04/2008.
( 9 )
16) In Achal Misra Vs. Rama Shanker Singh & Ors., (2005) 5 SCC 531, the Apex Court, in a Rent Control Proceeding on similar issue has observed as under:- "23. We make it clear that the respondents shall be liable to pay the rent
equivalent to mesne profits with effect
from the date with which they are found
to have ceased to be entitled to retain
possession of the premises as tenant and
for such period the landlord's
entitlement cannot be held pegged to the
standard rent. Reference may be had to
the law laid down by this Court in Atma
Ram Properties (P) Ltd. V. Federal
Motors (P) Ltd."
(Emphasis added)
17) Following the same in Crompton Greaves Ltd. Vs. State of Maharashtra, (2005) 11 SCC 547, the following observations are made, by the Apex Court, considering Order 41 Rule 5 and Order 20 Rule 12 of the CPC in Rent Control matter, while imposing terms / conditions for grant of stay at interim arrangement with regard to the tenanted non-residential premises.
"3. Both the parties have filed material supported by affidavits to enable the
Court to form a tentative opinion on the
quantum of mesne profits. Site plans and
photographs showing the location of the
property have also been filed. The rate
of rent at which the appellant has been
enjoying the property in terms of the
lease was Rs.2.11 p. per sq. ft. since
1968. The tenanted premises are
( 10 )
non-residential bearing Shops Nos. 5 and
6, Bada Manzil, Bibijan Street, 67/69,
Mohammed Ali Road, Mumbai."
"(1) With effect from 30/07/2002, the date of the decree passed by the High Court, the
appellant shall be liable to pay or
deposit for payment to the respondent
landlords, an amount calculated @ Rs. 65
per sq. ft. for the area on the ground
floor and Rs.22 per sq. ft. for the
area on the mezzanine floor."
(Emphasis added)
18. In Pradeep Kumar Vs. Hajari Lal, (2008) 3 S.C.C. 299 based upon valuation report showing Annual Rent about Rs.92,000/- p.a. i.e. Rs.7,666/- per month. The Apex Court has directed to pay Rs.4,000/- p.m. to be paid by 15th day of each succeeding month. The Court accepted the order passed by the High Court in Second Appeal and not interfered with the said interim order. The rent of the premises fixed 18 years ago was of Rs.600/- per month. The Supreme Court has observed that Rs.4,000/- p.m. as a compensation/ mesne profit is not excessive. The residential premises at Alwar was involved. The material was the valuers report. The principle/ ratio of Atma Ram (supra) has been considered in this case also.
19. In Niyas Ahmad Khan Vs. Mahmood Rahmat Ullah Khan & Anr., 2008(1) R.C.R., 596 (S.C.) the premises were ( 11 )
residential consist of 6 Rooms, Kitchen, 3 Verandahs, Open Terraces, 3 latrines/ Bathrooms. The rent was Rs.150/- p.m.. The High Court while admitting the Writ Petition of the landlord challenging the dismissal of the suit and the Appeal, passed an interim direction thereby directed the tenant to pay Rs.12,050/- p.m. with further directions that if the tenant does not pay, the landlord could evict the tenant by coercive process. The Supreme Court has set aside the said order. In that case, there was no material either oral or documentary or by way of affidavit to fix such rent of Rs.12,050/- which was 48 times of the rent of Rs.250/-. The landlord's suit and the appeal on facts were dismissed. Therefore, the tenancy was not at all terminated. There was no question of assessing the rent with reference to each room or portion of premises separately.
20. The Apex Court in Sadhu Ram Vs. Parminder Singh (2008) 8 SCC 132, modified the order 132 passed by the Appellate authority pending the appeal against the order decree of eviction passed by the Rent Controller and reduced provisional rent / mesne profits from (Rs. 59/- per Sq.Fts.) from Rs.9600 to 5000 per month. The rent of the shop was Rs.500/- per month. In April 2007, eviction decree was passed against which the Appeal was ( 12 )
preferred. The Appellate authority had fixed the said amount of Rs.9,600/- per month. The Supreme Court further directed the Appellate Authority to dispose of the Appeal expeditiously.
21. What emerge from these are:-
(a) The basic burden lies upon the landlord to prove and support his case of reasonable compensation/ mesne profits. He must put on record material documents/ along with the affidavit to support his case of enhanced compensation. The material if placed by the landlord / Licensor / Owner, the Court needs to consider the said material by giving full opportunity to the tenant / Licensee / Occupant / trespasser / obstructionists. Keeping in mind the effect of valuation or architecture's report / opinion and its validity being expert's opinion, which can be subjected to challenge from other side, if case is made out. (Jawajee Nagnatham Vs. Revenue Divisional Officer, Adilabad, A.P. & Ors., (1994) 4, S.C.C. 595.).
595.)
(b) The valuation report / opinion may be at least one of the government recognized valuer, apart from private valuer report, if any. Both the parties are free to ( 13 )
submit their material on the record to support their case through their respective affidavits. (The Special Land Acquisition Officer Vs. Sri Siddappa Omanna Tumari & Ors., A.I.R. 1995 S.C.840).
(c) The Court also needs to consider the principle of Order 20 Rule 12 of the C.P.C. while determining this ad-interim compensation/ mesne profits. The Court also needs to keep in mind as observed in Para 8 in Atma Ram (supra),
(supra) "quantified by this Court in this order, is only a tentative opinion formed by the Court on the basis of material made available for the parties". . The Apex Court in Ramnik Vallabhdas Madhvani and others v. Taraben Pravinlal Madhavani, 2004(4) Bom.C.R. (S.C.) 217: 2004(1) S.C.C.497, in reference to mesne profit observed as under:
"Mesne profit has been defined in Section
2(12) of the Code of Civil Procedure to mean
as profits which the person in wrongful
possession of property actually received or
might with ordinary diligence would have
received therefrom, together with interest on
such profits."
. The Apex Court in another judgment (Anderson Wright & Co. v. Amar Nath Roy and ors.) J.T. 2005(11) S.C.3, referring to earlier Supreme Court's judgment (Atma Ram Properties (P) Ltd. v. Federal Motors (P) ( 14 )
Ltd., 2005(3) Bom.C.R. (S.C.) 274 observed as under: "As held by this Court in Atma Ram Property
(P) Ltd. v. Federal Motors (P) Ltd., once a
decree for eviction has been passed, in the
event of execution such reasonable terms, as
would in the opinion of the Appellate Court
reasonably compensate the decree holder for
loss occasioned by delay in execution of the
decree by the grant of stay in the event of
the appeal being dismissed."
(d) The Court, needs to consider and take note of (i) the Rent Control Legislation, governing the particular premises/ residential or non-residential. (ii) the Location/ area of the premises (iii) the age/ nature of construction of the building/premises (iv) the facilities in the premises and outside the premises, advantages and disadvantages (v) the market value and the rental value of the premises based on architecture / expert / valuation reports / opinion (vi) other instances of the rent / license fees of similarly situated premises (vii) the date of termination of the tenancy / license.
(e) The Court also needs to consider that the compensation was awarded as condition precedent should not be oppressive and unreasonable which in a given case, if tenant failed to pay, has no option but to ( 15 )
suffer the execution of a decree, as observed by the Apex Court. Niyas Ahmed (supra).
(supra) The user and the use
of the premises are also material.
(f) The market value changes with time. The stamp duty is also changes accordingly. The rent/ license fee/ compensation so fixed at the interim period, based upon the market value may in a given case needs to be changed or re-fixed if case is made out. It may go up or go down if market value changes drastically.
(g) One cannot overlook that at the time of basic agreement, both the parties mutually agreed to the particular rent/ Leave license fee irrespective of valuation of the property. Now, when the Court fixes the compensation/ license fee, after termination of the tenancy, there is no question of any agreed rent or compensation. The Court decides the same based upon the material available/ placed on the record read with other various factors as referred in the Judgment.
(h) One important aspect is that the Court, after giving opportunities to both the parties, needs to decide the interim and urgent issue of grant of provisional fair and reasonable compensation/occupation charges, based ( 16 )
upon authenticated material produced on the record, pending the Appeal, summarily. There is no question of detail trial, but it is an essential condition precedent to grant stay of the eviction decree/order on the footing of Order 41, Rule 5 of Civil Procedure Code. The final decision of the appeal should be uninfluenced by such tentative figure / order. Such provisional payment should be condition precedent but it is always adjustable. The amount so fixed in such proceedings is tentative figure. Such interim order/ payment is always subject to the final result of the appeal.
(i) The cases governing the leave and licence agreement as contemplated under the Mah. Rent Act need to be decided on the basis of the provisions of the Mah. Rent Act, as it provides and empowers the Competent Authority to pass an appropriate order that licensee, after expiry of leave and licence agreement, to pay double the agreed compensation/licence fee, pending the application for eviction. But there is no provision of such double licence fee pending the Appeal under the Mah. Rent Act. Therefore, in such cases in absence of any provision, the Appellate Court may pass appropriate order, considering various factors as referred above. ( 17 )
(j) The cases of trespasser, unauthorised occupant, obstructionist need to be dealt with again on different footing than that of a regular tenant/protected tenant/licensee as they are not governed by the Rent Control Legislation. Such unauthorised or illegal occupants, based upon the material produced on record, after giving opportunity to them may be directed to pay such occupation charges/compensation, pending the Appeal, at the current market rate/ rent which may be determined by the Court, taking note of interest of both the parties.
22. The Ready Reckoner is basically for calculation of the stamp duty as per the Bombay Stamp Act, 1958. The assessment/ calculation of stamp duty of the tenanted premises, if any is also based upon agreed rent. The market value in relation to the property means that property would fetch, particular amount if sold in the open market on the date of the document. The said market value of the property is also useful to consider the capital gain taxes. It is subject to adjudication in a given case, if objected. The market value of the property for the purpose of stamp duty or capital gain taxes, cannot be overlooked but while fixing the rent or license fee or compensation, the formula or method of ( 18 )
compensation stamp duty cannot be extended arbitrarily. The various factors referred in this Judgment also need to be considered simultaneously based upon the material placed on record.
23. Strong reliance was placed on Majid Ahmedbhai Oomerbhoy v. Rashid Sattar Oomerbhoy & ors., 2005 (4) ALL MR 215 (SB), in support of the impugned order and contended that the formula of fixation of 9% royalty by the Recever under Rule 40, Rule 1 of Civil Procedure Code is reasonable return and the said principle, can be extended in fixing the compensation/use and occupation charges of such premises following the rate prescribed in Stamp Duty Ready Reckoner. This case, in the facts and circumstances, is not applicable as that was not the case after determination of tenancy. There was no question of any violation of provision of the Rent Act. In Majid (supra), ownership rights of the flat between the partners of the firm was involved. The different approach is necessary, in cases where the premises and the party's relationship are governed by the Rent Act. The formula of 9% return even if applied to the cases based upon title / ownership also depends upon the facts and circumstances of the case specially after considering the basic factors while fixing the tentative ( 19 )
amount.
24. The case in hand, in view of the above, requires reconsideration from all aspects with regard to the grant of compensation at the rate of Rs.50,000/- per month pending the Appeal. The Court to reconsider all factors as referred above including the material on record by giving full opportunity to both the parties. There is no question of fixing any compensation without any basis. The burden is on the landlord to prove his claim of fair and reasonable compensation by putting the material on record, including expert opinion report and other such instances etc. The tenant also permitted to show the contra material, if any. The Ready Reckoner itself provides the market value of the tenanted building or of old building. The alleged formula of Ready Reckoner, cannot be utilised for fixing such exorbitant compensation in such fashion.
25. Resultantly, the impugned order is quashed and set aside to the extent of grant of compensation at the rate of Rs.50,000/- per month. The rest of the order is maintained. It is desirable that the application and issue be decided as expeditiously as possible so that other side/landlord should not suffer loss of his due ( 20 )
compensation inspite of termination of tenancy pending the Appeal. It is also made clear that the amount so deposited by the petitioner pursuant to the order dated 7.10.2008 shall be adjusted in the final amount so arrived at by the Court.
26. The writ petition is partly allowed to the above extent. No costs.
( ANOOP V. MOHTA, J.)
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