Though ordinarily interference by this Court would not be warranted, particularly at an interlocutory stage, in the discretionary powers of the Appellate Court to arrive at the 'reasonable' figure in respect of the suit as a condition to the grant of stay to the execution of the decree of eviction, however, looking at the amount of litigation which is being generated on this issue, it would be necessary for this Court to consider if any criteria can be adopted so as to lay down some guidelines for the lower Courts in determining the amount so that the parties do not rush to this Court in every such matter complaining of such grave injustice which would have the effect of facing eviction without availing of their statutory right of appeal because of the fixing of such an amount of compensation/rent which would be excessive to the point of being oppressive. There, of course, cannot be any straight jacket or uniform formula laid down to determine as what can be termed as 'reasonable' and it would entirely depend on the facts and circumstances of each case. Nevertheless, in view of the volume of cases between landlord and tenants, and consequently the number of cases being filed in this Court on this issue, it would be necessary to lay down some parameters on the basis of which this amount can be arrived at. It is to be noted that this 'reasonable' amount so fixed in most cases is an ad hoc amount in absence of any evidence being led in the matter and without any full fledged inquiry which the legislature has contemplated under Order XX, Rule 12 of the C.P.C. The courts therefore have to be circumspect in arriving at this figure as it could have the effect of the appellant- tenant being thrown out of the suit premises, inspite of having a fair chance of success in the appeal, which is but a continuation of the suit, as a result of his inability to pay the amount so fixed by the Court. It is to be noted that what the Hon'ble Apex Court has emphasized and reiterated is the "reasonableness" of the amount.
14. In my opinion this would be a fit case to exercise the supervisory jurisdiction of this Court under Article 227 of the Constitution of India so as to examine the issue of 'reasonableness' itself and lay down certain parameters or guidelines so as to avoid manifest injustice. A balance would have to be struck in weighing the equities so that there is no substantial loss to either party. The Court may, for example, consider examining (1) what percentage of the market value in terms of license fee, the premises in question can fetch could be termed as 'reasonable', (2) would this percentage be different in respect of residential premises vis-a-vis commercial premises, (3) which of the parties would be liable to pay the property taxes and other taxes/cess/charges, (this can go to more than 50% of the compensation for commercial premises in Mumbai), (4) whether the amount can be worked out on the basis of rateable value of the suit premises or number of times of the statutory rent or any other method of valuation, (5) how is the amount to be adjusted in case of inquiry under Order XX, Rule 12 of the CPC relating to mesne profits, (6) when can the amount awarded said to be unreasonable or oppressive or resulting in manifest injustice, (7) whether any report from an expert is necessary at that stage, (8) would this figure of 'reasonable' compensation be different in case of occupants who are trespassers or licensees who have lost protection of the rent control legislation or tenants holding over, etc.
IN THE HIGH COURT OF BOMBAY
Writ Petition No. 3332 of 2008
Decided On: 16.06.2008
Marjorie Passanah and Anr. Vs. Mumtaz Iqbal Shaikh
Hon'ble Judges/Coram:
A.A. Sayed, J.
Citation:2009(1) MHLJ 972
1. Heard the learned Counsel for the parties.
2. This petition impugns the order dated 10.2.2008 passed by the Appellate Bench of Small Causes Court at Bombay, whereby the petitioners have been ordered and directed to deposit and continue to deposit compensation @ Rs. 15,000/- per month, in addition to the monthly rent and permitted increases till the decision in the Appeal as a condition to the grant of stay to the execution of the decree and liberty has been granted to the respondent to withdraw the amount deposited towards monthly rent and permitted increases as per the order of the trial Court.
3. The suit premises is a flat comprised of two bed rooms with servant's room and attached toilet in a building known as Victoria Terrace, 3rd Victoria Cross Lane, Byculla, Mumbai - 400 027 admeasuring 1250 sq.ft. carpet area. The suit was filed by the respondents, who are the landlords of the suit building for eviction of the petitioners, who are tenants, from the suit premises, essentially on the ground of bona fide requirement which suit came to be decreed. The matter was carried in appeal by the petitioners. It is in this appeal that an application came to be filed by the petitioners in the form of Interim Notice for stay of the execution of the decree pending the hearing and final disposal of the appeal, wherein the impugned order came to be passed.
4. The learned Counsel for the petitioners submitted that while allowing the prayer of stay of the execution of the decree, the Appeal Court was not justified in imposing the condition of deposit of the amount of compensation @ Rs. 15,000/- per month by the petitioners. It is his contention that the amount of Rs. 15,000/- per month in addition to rent and permitted increases would be too exorbitant and the petitioners would in the event of inability to pay the same, have to vacate the suit premises and they would be deprived of their statutory right to appeal. It is submitted that the suit was filed on the ground of bona fide requirement for her personal use and occupation and therefore it is not as if the respondent is to give the suit premises on leave and license to 3rd parties and the Appeal Court has erred in fixing compensation of Rs. 15,000/- per month which was arbitrary, unreasonable and excessive. He further submitted that the petitioner was paying a sum of Rs. 645/- per month and suddenly he is now required to pay Rs. 15,000/- per month by the impugned order. It is his contention that even otherwise the suit premises cannot fetch more than Rs. 5,000/- per month and the building is more than 100 years old and is in a dilapidated state. The learned Counsel has produced photographs to show the condition of the suit building. It is further submitted that the petitioners have a fair chance of success in the Appeal as the respondent has in his possession another flat in the suit building and therefore there was no bona fide need of the suit premises of the respondent, which the trial Court has failed to appreciate.
5. The learned Counsel for the petitioners has relied upon a recent unreported decision of the Apex Court in case of (Niyas Ahmad Khan v. Mahmood Rahmat Ullah Khan and Anr.), in Civil Appeal No. 3372 of 2008 (arising out of SLP(C) No. 18453/2006) dated 5th May, 2008. He invited my attention to the observations of the Apex Court in the said decision which reads thus:
... In writ petitions filed by tenants, while granting stay of execution of the order of eviction pending disposal of writ petition, the High Court has the discretion to impose reasonable conditions to safeguard the interests of the landlord. But even in such cases the High Court cannot obviously impose conditions which are ex facie arbitrary and oppressive thereby making the order of stay illusory.
He further pointed out the portion in the said decision, which reads as follows:
...Where the High Court chooses to impose any conditions in regard to stay, such conditions should not be unreasonable or oppressive or in terrorem. Adopting some arbitrary figures as prevailing market rent without any basis and directing the tenant to pay absurdly high rent would be considered oppressive and unreasonable even when such direction is issued as a condition for stay of eviction. High Court should desist from doing so.
The Apex Court ultimately held as under:
To sum up, in writ petitions by landlord against rejection of eviction petitions, there is no scope for issue of any interim direction to the tenant to pay higher rent. But in writ petitions by tenants against grant of eviction, the High Court may, as a condition of stay, direct the tenant to pay higher rent during the pendency of the writ petition. This again is subject to two limitations. First the condition should be reasonable. Second, there should not be any bar in the respective State rent control legislation in regard to such increase in rent.
6. The learned Counsel for the petitioner has laid emphasis on the expression "reasonable" and also "there should not be any bar in the respective State rent control legislation in regard to such increase in rent" used in the said decision. Relying upon the aforesaid observations, the learned Counsel for the petitioner submitted that since in the Maharashtra Rent Control Act, 1999 (the said Act' for short) which is applicable in the instant case, there is a clear bar with regard to increase in rent of more than 4% per annum, the Appeal Court ought not to have granted compensation of more than the statutory rent and permitted increases under the said Act. He further submitted that in any event the amount of Rs. 15,000/- per month has been arrived at by the lower Appellate Court arbitrarily and without applying its mind inasmuch as the agreements of leave and licence relied upon by the respondent, are the premises which are comparatively newly constructed having modern amenities. He further submitted that in the case of the leave and license agreement dated 9.10.2002, relied upon by the respondent, though the license fee is shown as Rs. 21,000/- per month, the area of the flat is not known and a garage was also provided under the said license. He further pointed out that in the case of leave and license agreement dated 13.8.2007, the license fee was only Rs. 8000/-. He further submitted that both the instances given were not in immediate proximity of the suit premises/building.
7. The learned Counsel for the respondent, on the other hand contended that in view of Order XLI, Rule 5 of the Code of Civil Procedure and the settled position of law, the Appeal Court was justified in putting conditions while granting stay to the execution of the decree. The learned Counsel submitted that the discretionary relief granted by the Appeal Court as a condition for stay ought not to be interfered with by this Court in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India. He further submitted that the sum of Rs. 15,000/- awarded as compensation was reasonable and ought not to be disturbed as the suit premises is situate in the heart of Mumbai City. He referred to the leave and license agreements relied upon by the respondents and submitted that the leave and licence agreement dated 9.10.2002 wherein a sum of Rs. 21,000/- per month is paid as license fee is more than six years ago and the license fee in the area has increased substantially since and the leave and licence agreement dated 13.8.2007 wherein the licensee is Rs. 8000/- per month is a flat of less than half the size of the suit premises. He, therefore, submitted that the Appeal Court has rightly directed the petitioners to pay compensation in respect of the suit premises @ Rs. 15000/- per month which is reasonable looking to the facts and circumstances of the case.
8. The learned Counsel for the respondent has relied upon the decision in the case of (Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd.) reported in MANU/SC/1047/2004 : (2005)1SCC705 . He has invited my attention to paragraph No. 19 of the said decision, wherein it was held thus:
19. To sum up, our conclusions are:
(1) While passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure, 1908, the Appellate Court does have jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed and insofar as those proceedings are concerned. Such terms, needless to say, shall be reasonable.
(2) In case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of tenant contained in Clause (1) 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 proceeding 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.
9. The learned Counsel for the petitioner has also relied upon a decision in case of (Anderson Wright and Co. v. Amar Nath Roy and Ors.) reported in MANU/SC/0301/2005 : AIR2005SC2457 . He has invited my attention to the portion in the said ruling which reads as under:
... With effect from the date of decree of eviction, the tenant-is liable to pay mesne profits or compensation for user and occupation of the premises at the same rate at which the landlord would have been able to let out the premises on being evicted by the tenant. While determining the quantum of amount so recoverable by the landlord, the landlord is not bound by the contractual rate of rent which was prevailing prior to the date of the decree.
10. I have gone through the impugned order and material on record including the rulings cited by the learned Counsel on both sides. It is noted that in both the above cases cited by the learned Counsel for the respondent, the premises in question were commercial premises. In case of Atma Ram Properties (P)Ltd. (supra), the question was whether the Appeal Court was justified in putting the appellant-tenant on terms and directing him to compensate the landlord by payment of reasonable amount which is not necessarily the same as the contractual rent. The rational for the same as observed in the Apex Court judgment was that there was a need to deter the tenants from perpetuating the life of litigation and thereby robbing the landlord of the fruits of the litigation even if successful. The only question in that case was whether the High Court could impose such terms to compensate the landlord or whether the same contractual rent ought to have been continued. It is further noted that in that case, the commercial premises were admeasuring 2000 sq.ft. and the original rent was Rs. 371.90/- and the Appeal Court directed the petitioner to deposit Rs. 15,000/- as a condition for grant of stay to the execution of the decree for eviction, even though the adjoining premises belonging to the same landlord admeasuring 2000 sq.ft. was let out on rent of Rs. 3.5 lac a month. The Apex Court in that case went on to hold that that the Appeal Court could impose conditions. However, in that case, the reasonableness of the quantum of Rs. 15,000/- was not in issue before the Apex Court.
11. In Anderson Wright Co's case (supra), relied upon by the learned Counsel for the respondent, the premises again was a commercial premises and the compensation in respect of the instances referred to of the other occupants of the suit building were Rs. 32/- per sq.ft. and Rs. 25/- per sq.ft. and taking an over all view of the matter and the material available, the Apex Court fixed the mesne profit/compensation @ 15 per sq.ft., subject to final determination of the same by the Competent Forum. The Apex Court also permitted the respondents to move an application under Order XX, Rule 12 of the CPC or to pursue such remedy as may be available to them under the law for determination of amount and recovery of mesne profits which they would be entitled to recover from the appellants for the period between the date of institution of the suit till the date of recovery of possession, in the event of appeal being dismissed. Pertinently the Apex Court in that case clarified that the amount quantified by that Court was only a tentative opinion formed by the Court.
11. Coming back to the case of Niyas Ahmad Khan (supra) cited by the learned Counsel for the petitioners, it is to be noted that, that was a case where the High Court had directed the tenant, while admitting the Writ Petition of the landlord, to pay rent @ Rs. 12,050/- per month, when the statutory rent was Rs. 150/- per month, even though the landlord had been unsuccessful in getting eviction orders before both the Authorities below. The Apex Court on an SLP filed by the tenant against the said order of the High Court, was pleased to set aside the same and held that there was no scope for issue of any interim direction to the tenant to pay higher rent, in petition filed by landlords against rejection of eviction. However in petitions by tenants against grant of eviction, the High Court may, as a condition of stay, direct the tenant to pay higher rent during the pendency of the petition. However since in the case of Niyas Ahmad Khan (supra), the Apex Court was dealing with a case of an unsuccessful landlord and not that of an unsuccessful tenant who was seeking a stay to the execution order, that case would not be applicable to the case in hand in which we are dealing with a case where the unsuccessful tenant is seeking a stay to the execution of the decree pending the Appeal. In the present case, therefore, it cannot be said that the increase in rent cannot be more than the statutory rent. The only question therefore for consideration would be the reasonableness of the increase in the rent and/or compensation.
12. In the case in hand, the suit premises are residential and the statutory rent is Rs. 645/- per month and by the impugned order the petitioners are required to pay Rs. 15,000/- per month which would amount to roughly 23 times the statutory rent. From the photographs produced it does appear that the suit building, which is more than 100 years old, is not in a good shape and certainly cannot be compared to the instances of leave and license agreements which are in respect of newly constructed building, as compared to the suit building. Can this amount of Rs. 15,000/- in the instant case be said to be reasonable considering the fact that in the case of Atma Ram Properties (P) Ltd. (supra) the premises in question was commercial and though the adjoining premises belonging to the same landlord fetched more than Rs. 3.5 lac per month, the Appeal Court thought it fit to fix only Rs. 15,000/- per month and in the case of Anderson Wright Co. (supra) which was again commercial premises, the Apex Court tentatively fixed approximately 50% of the amount on the compensation which was fetched by other premises in the same building? I am not convinced.
13. Though ordinarily interference by this Court would not be warranted, particularly at an interlocutory stage, in the discretionary powers of the Appellate Court to arrive at the 'reasonable' figure in respect of the suit as a condition to the grant of stay to the execution of the decree of eviction, however, looking at the amount of litigation which is being generated on this issue, it would be necessary for this Court to consider if any criteria can be adopted so as to lay down some guidelines for the lower Courts in determining the amount so that the parties do not rush to this Court in every such matter complaining of such grave injustice which would have the effect of facing eviction without availing of their statutory right of appeal because of the fixing of such an amount of compensation/rent which would be excessive to the point of being oppressive. There, of course, cannot be any straight jacket or uniform formula laid down to determine as what can be termed as 'reasonable' and it would entirely depend on the facts and circumstances of each case. Nevertheless, in view of the volume of cases between landlord and tenants, and consequently the number of cases being filed in this Court on this issue, it would be necessary to lay down some parameters on the basis of which this amount can be arrived at. It is to be noted that this 'reasonable' amount so fixed in most cases is an ad hoc amount in absence of any evidence being led in the matter and without any full fledged inquiry which the legislature has contemplated under Order XX, Rule 12 of the C.P.C. The courts therefore have to be circumspect in arriving at this figure as it could have the effect of the appellant- tenant being thrown out of the suit premises, inspite of having a fair chance of success in the appeal, which is but a continuation of the suit, as a result of his inability to pay the amount so fixed by the Court. It is to be noted that what the Hon'ble Apex Court has emphasized and reiterated is the "reasonableness" of the amount.
14. In my opinion this would be a fit case to exercise the supervisory jurisdiction of this Court under Article 227 of the Constitution of India so as to examine the issue of 'reasonableness' itself and lay down certain parameters or guidelines so as to avoid manifest injustice. A balance would have to be struck in weighing the equities so that there is no substantial loss to either party. The Court may, for example, consider examining (1) what percentage of the market value in terms of license fee, the premises in question can fetch could be termed as 'reasonable', (2) would this percentage be different in respect of residential premises vis-a-vis commercial premises, (3) which of the parties would be liable to pay the property taxes and other taxes/cess/charges, (this can go to more than 50% of the compensation for commercial premises in Mumbai), (4) whether the amount can be worked out on the basis of rateable value of the suit premises or number of times of the statutory rent or any other method of valuation, (5) how is the amount to be adjusted in case of inquiry under Order XX, Rule 12 of the CPC relating to mesne profits, (6) when can the amount awarded said to be unreasonable or oppressive or resulting in manifest injustice, (7) whether any report from an expert is necessary at that stage, (8) would this figure of 'reasonable' compensation be different in case of occupants who are trespassers or licensees who have lost protection of the rent control legislation or tenants holding over, etc.
15. In view of the above discussion, in my opinion the matter requires consideration. Hence, Rule.
16. Pending the hearing and final disposal of the petition, as an interim measure it is directed as under:
(i) The petitioners shall deposit and continue to deposit Rs. 7,500/- per month, being 50% of the amount of compensation, as directed by the Appeal Court within four weeks from the date of this order;
(ii) The petitioners shall file an undertaking in this Court that in the event they do not succeed in the Appeal, they would pay the entire amount or such amount, as directed by the Appeal Court. The Undertaking to be filed within four weeks from today.
(iii) Pendency of this writ petition will not preclude the Appeal Court from deciding the Appeal and/or any Court proceeding with the inquiry under Order XX, Rule 12 of the CPC, which will be decided on its own merits and without being influenced by any observations in this order.
(iv) The impugned order shall stand modified to the aforesaid extent.
17. Hearing of the petition is expedited. Let the petition be listed for hearing and final disposal after four weeks. It is made clear that pendency of this petition will not preclude any Court in any manner from deciding the application for stay and arriving at the reasonable amount as a condition for the grant of stay to the eviction of the unsuccessful tenant/licensee/occupant.
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