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2005(1) Supreme 469
Supreme Court of India
(From Delhi High Court)
R.C. Lahoti, CJI and G.P. Mathur, J.
M/s. Atma Ram Properties (P) Ltd. —Appellant
versus
M/s. Federal Motors Pvt. Ltd. —Respondent
Civil Appeal No. 7988 of 2004
(Arising out of S.L.P. (C) No. 6415 of 2002)
Decided on 10-12-2004
Counsel for the Parties :
For the Appellant : K. Ramamurthy, Sr. Advocate, L.K. Garg, Sriram J. Thalapathy and Balraj Dewan, Advocates.
For the Respondent : Ranjit Kumar, Sr. Advocate, Ms. Anu Mohla and P.D. Gupta, Advocates.
Held : 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. (Para 19)
In the case at hand, it has to be borne in mind that the tenant has been paying Rs. 371.90 p. 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. (Para 20)
Certainly. Based on the provided legal document, here are the key points:
When an appellate court grants a stay on proceedings or execution of a decree, it has the authority to impose reasonable terms on the applicant, such as compensation to the decree-holder for delays, which need not match the contractual rent rate (!) (!) .
In cases governed by rent control legislation, the tenancy is considered terminated only upon the passing of the eviction decree, not merely by its termination under general law, and the tenant is liable to pay mesne profits or compensation based on the market rent from the date of eviction (!) (!) .
The doctrine of merger does not delay the effective date of tenancy termination; the tenancy ends with the eviction decree, regardless of subsequent appellate proceedings or merger of decrees (!) (!) .
The definition of ‘tenant’ under the relevant rent control law includes those continuing in possession after tenancy termination but excludes those against whom eviction orders have been made; thus, eviction orders mark the end of tenancy, and the tenant becomes an unauthorized occupant from that date (!) .
The court has the discretion to put the tenant on terms during the stay, including payment of a reasonable amount for use and occupation, which may be higher than the contractual rent, especially considering the value of the premises and prevailing market rates (!) (!) .
The order of the High Court setting aside the conditions imposed by the tribunal regarding deposit amounts was found to be erroneous; the tribunal’s decision to impose a deposit of Rs. 15,000 per month was justified, and the appellate court’s authority includes ensuring fair compensation during stay orders (!) (!) .
The successful party in eviction proceedings is entitled to the enforcement of the decree, and delays in execution should be compensated appropriately, often through payment of market rent or a reasonable sum for use and occupation during the pendency of appeals (!) .
The appellate court has the authority to restore the tribunal’s order with costs, and the tenant is given a specified period to comply with deposit requirements and clear arrears (!) .
Overall, the legal principles emphasize that stay orders are discretionary, can impose reasonable conditions, and that termination of tenancy occurs with the eviction decree, not merely by appellate or merger proceedings, ensuring fair treatment of both landlords and tenants during litigation (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
Judgment
R.C. Lahoti, CJI—Leave granted.
2. 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 month 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.
3. 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.
4. 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.
5. 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 oc
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