Whether Landlord can be granted interim compensation at the rate of ten percent of value of rented property?

Tenancy - Interim Compensation/ Mesne Profit - Present application by landlord, praying that during pendency of Writ Petition tenant/respondent be directed to pay interim monthly compensation/mesne profit at least at rate of 70,500/ per month with effect from filing of writ petition - Held, fact that earlier unconditional interim order was granted after hearing both sides cannot preclude landlord from applying for modification of order so as to impose some legitimate condition to meet ends of justice - Keeping in mind that Writ Petition is not likely to reach for hearing for quite some time, landlord who has succeeded in getting decree of eviction is entitled to claim suitable interim arrangement to meet ends of justice - There is nothing in law, which would preclude landlord in doing so - If tenants' contention is accepted, value of property should not be less than Rs. 53.50 Lakhs - Applying commercial practice of fair returns of 10% p.a. against value of property, tenants would be liable to pay at least amount of Rs. 5,35,000/- p.a. towards interim compensation or fair market rent to avail of protection given by Court in terms of earlier order - According to tenant, keeping in mind present market condition, amount of return should not be more than 5% - Once again, no instance or document has been produced by tenants to substantiate this position - Assuming that there is slack in demand of rental properties and return have fallen to some extent, giving that benefit would assume that instead of 10% tenants should be made to pay at least at rate of 8% on fair market value determined on basis of amount indicated in Ready Reckoner - That would come to around Rs. 4,28,000/ p.a. - On this finding, tenant would be liable to pay yearly interim compensation of around Rs. 4,28,000/ which would round off that figure to Rs. 4,00,000/- p.a., which comes to monthly compensation of Rs. 33,333/ - Therefore, it is ordered that tenant shall pay interim monthly compensation in respect of suit premises at rate of Rs. 33,333/- to avail of interim protection granted by this Court earlier - Above arrangement would be subject to outcome of this Writ Petition - Application preferred by landlord would succeed on condition that landlord would file undertaking in this Court that in event tenants succeed in present Petition, entire amount recovered by them in excess of monthly rent of suit premises, in terms of this order shall be reimbursed to tenants with interest, not less than 12% per annum, or such other amount, as may be fixed by Court at relevant time - Application is disposed of on above terms

Citation: 2009(3)BomCR99

IN THE HIGH COURT OF JUDICATURE OF BOMBAY

CIVIL APPELLATE JURISDICTION

CIVIL APPLICATION NO.37 OF 2009

IN

WRIT PETITION NO.8702 OF 2005

Super Max International Pvt.Ltd. & Ors. ..Applicants.

V/s.

..Respondents.

M/s.R.M.Choksey & Co.

CORAM: A.M.KHANWILKAR,J

DATE : MARCH 3, 2009.

P.C. :

Heard Counsel for the parties.

2. This

1. 

on

the

Atma

Application by the landlord is

founded

exposition of the Apex Court in the case

Ram

Properties

Vs.Federal

of

Motors[2005(3)

Bom.C.R.274], praying that during the pendency of the

Writ

Petition the tenant be directed to pay

interim

monthly compensation/mesne profit atleast at the rate

of

Rs.70,500/- per month with effect from 1st

July,

2003.

3.

To

buttress

compensation

claim the

of the suit premises

respect

that 

Rs.70,500/-,

monthly

the landlord has relied on

is

the

around

in

the

value of the property indicated in the Ready Reckoner

According to the landlord, the fair market

price indicated in

which is for

given

commercial

about

respect of the

419

per

to

That

be

at

and

premises,

the

used

rate

The premises

fact is

landlord,

for

of

not

admeasures

in

dispute.

if the value in

the

Ready

ig

According

should

sq.mtr.

sq.ft.

suit

office purpose

activities

Rs.1,88,400/-

2008.

of

Reckoner

is to be applied, the fair market value

of

market

the premises would be around Rs.80 Lakhs and the fair

return

conservative

on

rate

the

of

suit

property

the

more than

10% would be much

at 

Rs.70,500/- per month.

4.

On

the

other hand, tenants submit that

the

question of determining interim compensation does not

arise

That

in

22nd

interim

one.

present

February, 2006, both sides were

relief was granted, which was

case.

that

heard

and

unconditional

At this distance of time, it is not open to the

landlord

was

fact situation of the

is so because while admitting the Writ Petition

on

the

to

claim interim monthly compensation,

request was not pressed when the Writ

heard

for admission.

Besides, it is

as

Petition

contended

that

the

amount

monthly

interim

claimed by the

compensation

landlords

at

the

towards

rate

of

The

Ready

of

tenants

on the other hand, rely on

the

5.

Rs.70,500/- is excessive.

Reckoner to contend that the fair market value

the

premises

Rs.1,37,300/-

value

of

for office user

per

the

sq.mtr.

suit

is

mentioned

Applying that

property would

rate

come

as

to

the

about

Rs.53,46,000/- and not Rs.80 Lakhs, as claimed by the

in

Besides, according to the tenants keeping

mind

ig

landlord.

the

present

market

trend

of

downward

be

movement, the question of offering return of 10% will

unrealistic.

should

tenants,

return

not exceed 5% of the fair market value of the

On

the above argument, it

property.

that

the

submitted

at

the

rate

of

Rs.70,500/-

monthly

is far

Lastly it is contended on behalf of 

excessive.

tenants

is

claim of the landlord for interim

compensation

According to the

the

amount

that they would not be able to pay such high

towards monthly compensation and

resultantly

it will amount to putting unreasonable restriction on

them

as

condition for enjoying interim

protection,

which will be unjust and inequitable.

6.

Having

considered

the rival

arguments

and

perusing the relevant documents on record, I would in

on

first place answer the preliminary point

raised

the

behalf of the tenants that it is not open to

the

landlord to ask for modification of the interim order

for continuation of protection to the tenants during

the pendency of the Writ Petition which has

been

admitted

after

hearing

both

already

sides

and

it

Learned

would

Counsel for the tenants submits that

ig

7.

unconditional interim relief granted.

amount to review of the Order

mind

the

parameters

jurisdiction,

the

for

exercising

review

it is not open to this Court to impose

further condition other than the one provided in

any

22nd

It is then contended that keeping in

February, 2006.

dated

interim

buttress

order

dated 22nd February,

2006. To

this contention, reliance is placed on the

decision of the Apex Court in the case of Haridas Das

Usha

v/s.

Rani

Banik(Smt) and ors.

(2006) 4 SCC page 78.

that

would

it

reported

in

The argument clearly overlooks

is not a case of review of the

order. It

been a case of review, if the Court was

upon to recall the entire interim order. The

have

called

landlord

by

this application is merely

asking

for

imposing additional condition to allow the tenants to

enjoy the suit property in lieu of interim protection

the pendency of the Writ Petition.

of this relief at best would result in

of the

Granting

modification

during

interim order and not review thereof.

Thus

Das(Supra)

Moreover,

the

fact that the

interim order

cannot preclude

the order

of

landlord

condition

tenants.

unconditional

from

so as

sides

applying for

impose some

to

to meet the ends

of

justice.

in mind that the Writ Petition is not likely

reach

for

landlord who

eviction is

hearing

for

to

the 

ig

Keeping

earlier

the

was granted after hearing both

modification

legitimate

is of no avail to

Haridas

understood, the principle stated by the Apex Court in

has

quite

succeeded in

entitled

to

some

the

decree of

getting

time, 

claim

suitable

interim

arrangement to meet the ends of justice.

8.

It

stated

was

by

the

then argued that the legal

Apex

Court

in

the

position

Atma

Ram

Properties(supra) case could have been invoked by the

landlord, when

February, 2006.

the

matter

was

argued

on

22nd

The fact that such argument was not

canvassed on behalf of the landlord on 22nd February,

2006

in my opinion, in no way preclude the

landlord

to lateron apply for imposing additional condition to

enable the tenants to avail of the interim protection

in

terms

of

the Order dated 22nd

February,

2006.

There

is

in doing so.

preclude

the

In other words, the fact that

landlord

nothing in law, which would

no argument for imposing condition, now prayed by the

come

in

was canvassed on 22nd February, 2006, will

the

landlord,

way of the landlord to call

upon

the

Court to impose appropriate condition in terms of the

legal

position stated by the Apex Court in Atma

Properties case(supra).

Ram

Indeed, the question whether

the landlord would be entitled for arrears of interim

compensation with retrospective effect is

ig

monthly

matter within the discretion of the Court.

The Court

confine the relief to the landlord from the date

may

a

of the filing of the present Application.

meet

That would

the ends of justice and address the concern

of

the tenants as well to that extent.

9. I

shall now deal with the argument that

amount claimed

by

the landlord

month towards

at

the

per

compensation is excessive or otherwise.

Rs.70,500/- 

amount

rate

of

the

rate

interim

monthly

Even if the

fair market price of the property at

by

the landlord is to be ignored and the contention of

the tenant 

would

Rs.1,88,400/- per sq.

mtr.

the

as assumed 

value

of

of

is accepted, even then the

fair

market

of the suit property as per the Ready Reckoner

be

around

Rs.53.50

Lakhs,

as

the

price

indicated

at

for office premises in the Ready

Rs.1,37,300/-

per sq.

mtr.

Reckoner

It was argued

that

the present market condition being precarious one, it

the

suit

stated

premises.

to

be

is not possible to fetch amount of Rs.53,50,000/- for

The argument will have

rejected

as

the

tenants

to

be

have

not

produced any comparable instance to substantiate that

contention.

the

basis

of the price indicated in

which

aforesaid, even

less

if

the

an

official

the

than

of

Ready

As

contention is

value of the property should

Rs.53.50 Lakhs.

practice

the

document. 

tenants’

accepted,

is

ig

Reckoner, 

on

Instead, the Court will have to proceed

Applying the

not

be

fair returns of 10% P.A.

commercial

against

the

value of the property, the tenants would be liable to

pay atleast amount of Rs.5,35,000/- per annum towards

the interim compensation or fair market rent to avail

of

the protection given by the Court in terms of the

Order

dated

however,

22nd

would

February,

compensation

be

with

liable

2006.

to

pay

The tenants

such interim

effect from 2nd July,

2008

i.e.

the date of filing of the present application and not

for

the

anterior

period.

The

monthly

interim

compensation would work out to around Rs.44,583/-.

10.

To

get

over this position Counsel

for

the

10%

would argue that fair returns at the rate of

is very excessive.

mind

the

return

present

should

According to him, keeping in

market condition, the

not be more than 5%.

amount

of

Once again,

tenants

no

instance or document has been produced by the tenants

to substantiate this position. Assuming that

is slack properties

in

demand of rental

fallen

some

the

have

benefit I

tenants should be made to pay atleast at the rate of

that instead

giving

of

that

10%

the

assume

extent,

and

return 

would

to

there

on the fair market value determined on the

of the amount indicated in the Ready Reckoner.

come

finding,

interim

to

around

the

around

which

That

pay

this

yearly

Rs.4,28,000/-.

off that figure to Rs.4,00,000/-

round

of

basis

On

tenant would be liable to

compensation

would

Rs.4,28,000/-P.A.

would

ig

8% 

comes to monthly compensation of

I

p.a.,

Rs.33,333/-.

This arrangement would meet the ends of justice and

also address the

of

amount

the argument of the tenants

compensation claimed by the

that

landlord

is

excessive.

11. It

that they

compensation

was then argued on behalf of the

would

will

not

be

able

to

claimed by the landlord.

pay

tenants

monthly

This argument

interim

have been relevant if this Court were to grant

compensation at the rate of Rs.70,500/-,

as

claimed

the

by the landlord as it is.

above

logic,

I

However, applying

am satisfied

that

amount

of

to

question is:

pay

record

even

For,

it

whether the tenants will be unable

this amount.

From

the

documents

is not possible to infer

the

latest

Respondent

on

The

Rs.33,333/- per month would meet the ends of justice.

that

yearly return filed on

position.

record

of

Nos.1(a) would indicate that the exempted

income of Respondent No.1(a) is Rs.9,44,004/- towards

income,

Rs.8,50,118/-

towards

dividend

interest

and Rs.17,19,210/- towards long term

gains. The aggregate annual income as per the return

Rs.29,13,332/-.

income

long term capital gains is to be set apart,

nevertheless

the

income of the

interest

income

towards

aggregate

is

learned

schedule

for

No.1(b)

E1

position.

and

Respondent

dividend

around Rs.18 Lakhs.

Counsel

Respondent

if the amount

capital

of 

towards

Even

is

ig

income 

of

as

in

According to

not

the

income

Rs.1,99,454/-.

the return does

Insofar

income

the tenants, gross

is

No.1(a)

of

However,

support

Respondent

that

No.1(b)

is

concerned, once again return under column Schedule E1

indicates

dividend

capital

that the interest income is Rs.4,90,943/-,

income

gains

Rs.1,66,286/-.

head

is

is

Rs.6,81,000/-

Rs.642792/-

and

and

long

other

term

income

The aggregate income under all these

is shown as Rs.19,81,021/-.

Once again even in

the

case

capital

of

gains

long

is to be set apart, the other

term

income

interest and dividend exceeds over Rs.10 Lakhs.

from

Respondent No.1(b), if the

Counsel for the tenants however, submits that income

of Respondent No.1(b) is

position

is

not

Rs.5,54,462/-,

supported

by

the

particular, column schedule E1.

Accordingly,

the

view

that

I have no hesitation in

it is not a case as if

interim

compensation

at

by

in

taking

imposing

the

rate

ig

monthly

return,

12.

which

the

of

Rs.33,333/-, the tenants will not be able to pay that

or

other

it would be a harsh arrangement.

amount

hand, the premises in question are

situated

On

the

admittedly

in prime locality at Fort in front of

GPO,

Mumbai.

13.

it

Taking overall view of the matter, therefore,

is

ordered

that the tenant

shall

pay

interim

compensation in respect of the suit premises

at rate

monthly 

the

protection

2006.

from

Rs.33,333/- to

granted

avail

of

by this Court on 22nd

interim

February,

Liability to pay the said amount would accrue

the

month

application

tenants

today

of

has

shall

and

of

July,

2008

as

the

present

been filed on 2nd July, 2008.

pay arrears within eight

regularly

pay

future

weeks

interim

The

from

monthly

compensation

of

in terms of this order on or before 5th

every English calender month.

Failure to

comply

with any of the above condition or in case of any one

default, the interim protection granted by this Court

stand

reference

will

vacated

be

without further

the Court, in which case the 

to

forthwith

landlord

shall

free to proceed with the execution

decree.

Indeed,

the

above

the

would be

arrangement

of 

subject to the outcome of this Writ Petition.

In the

committed

by the tenants and

the

landlord

proceeds

ig

default

event the interim relief stands vacated on account of

to take possession of the suit premises

the decree, then the landlord will have to

executing

ensure

by

that the premises are kept in such

condition

and utilised in such a way that the possession of the

premises

will

suit

tenants, if

the

through his

have

Court so

Counsel

to

be

restored

directs.

assures

to

The

to

the

abide

landlord

by this

event the

condition.

14.

Needless

landlord

observe that in the

eventually

proceeding,

to

the

succeeds

in

the

landlord would be free to

present

ask

for

mesne profits in respect of the suit premises

claim will have to be considered on its own merit in

accordance with

the

decision. Indeed,

law,

uninfluenced

which

by

the tenant would be entitled

this

to

claim

for

adjustment of the amount paid by them

by

way of interim monthly compensation against the claim

The

would

Application

file

succeed

preferred by

the

landlord

15.

of mesne profits.

on condition that the landlord

would

undertaking in this Court that in the event the

tenants

amount

succeed in the present Petition, the

of

by them in excess of

the

the suit premises, in terms of

monthly

this

order

rent

recovered

entire

ig

shall be reimbursed to the tenants with interest, not

less than 12% per annum, or such other amount, as may

fixed

by

the Court at the relevant

time.

All

be

questions in that behalf are left open.

Application

16.

is

disposed

of

on

the

above

terms.

(A.M.KHANWILKAR,J)