1. Appeal against High Court order fixing monthly compensation for use and occupation of premises while staying an eviction decree. (Para 1 , 2 )
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2022 Supreme(SC) 1142
SUPREME COURT OF INDIA
M.R. SHAH, M.M. SUNDRESH, JJ.
Sumer Corporation - Appellant
Versus
Vijay Anant Gangan & Ors. - Respondent
Civil Appeal No. 7774 of 2022 (@ SLP (C) No. 16019 of 2020)
Decided on : 09-11-2022.
Advocates appeared:
For the Appellant(s) : M/s. K J John And Co, AOR
For the Respondent(s): Mr. Shekhar Naphade, Sr. Adv. Mr. Rahul Tanwani, Adv. Mr. Anantha Narayana M.G., AOR Aishwarya Dash, Adv. Farah Hashmi, Adv. Mr. Kumar Mitakshar, Adv. Mr. Prashant Pratap, Adv. Mr. Tarun Gulia, Adv. Mr. Vikas Mehta, AOR
For the Appellant(s) : M/s. K J John And Co, AOR
For the Respondent(s): Mr. Shekhar Naphade, Sr. Adv. Mr. Rahul Tanwani, Adv. Mr. Anantha Narayana M.G., AOR Aishwarya Dash, Adv. Farah Hashmi, Adv. Mr. Kumar Mitakshar, Adv. Mr. Prashant Pratap, Adv. Mr. Tarun Gulia, Adv. Mr. Vikas Mehta, AOR
Important Points
IMPORTANT POINT
Eviction of tenant – From date of decree of eviction, tenant is liable to pay mesne profits or compensation for use and occupation of premises at same rate at which landlord would have been able to let out premises and earn rent if tenant would have vacated premises – Landlord is not bound by contractual rate of rent effective for the period preceding date of decree.
Eviction of tenant – From date of decree of eviction, tenant is liable to pay mesne profits or compensation for use and occupation of premises at same rate at which landlord would have been able to let out premises and earn rent if tenant would have vacated premises – Landlord is not bound by contractual rate of rent effective for the period preceding date of decree.
Subject
Property Law - Lease
Act Referred
Headnote
Civil Procedure Code, 1908 – Order XX Rule 12 – Eviction of tenant – Payment of compensation/mesne profit by tenant – From date of decree of eviction, tenant is liable to pay mesne profits or compensation for use and occupation of premises at same rate at which landlord would have been able to let out premises and earn rent if tenant would have vacated premises – Landlord is not bound by contractual rate of rent effective for the period preceding date of decree – In a revision / appeal preferred by tenant who has suffered eviction decree, appellate / revisional court while staying eviction decree can direct tenant to pay compensation for use and occupation of tenancy premises upon contractual rate of rent and such compensation for use and occupation of premises would be at same rate at which landlord would have been able to let out premises and earn rent if tenant would have vacated premises – Matter remanded to High Court for fresh determination of compensation for use and occupation of premises by tenant who has suffered eviction decree. (Paras 7.1, 7.2 and 7.3)
Facts of the case:
Feeling aggrieved and dissatisfied with the impugned order passed by High Court of Judicature at Bombay dated 05.11.2020 in Civil Revision Application No. 357 of 2017 by which while admitting revision application preferred by the contesting respondents herein – original revisionists against the judgment and decree passed by Appellate Bench of Court of Small Causes at Mumbai and while staying the judgment and decree passed by the Appellate Bench, High Court has directed the respondent No. 1 - original revisionist to deposit Rs. 2,50,000/- per month towards the compensation / mesne profit, the original lessor has preferred the present appeal.
Findings of Court:
Matter is remitted back to the High Court to determine the compensation for the use and occupation of the premises in question by the tenant / lessee afresh and taking into consideration observations made here. For that purpose, parties may be permitted to lead the evidence on the rate of rent that would have been earned by the landlord / lessor, if the lessor would have been able to let out the premises and earn rent if the tenant would have vacated the premises.
Result : Appeal Partly allowed.
Legal Category Hierarchy
Table of Contents
2. Dispute over whether monthly compensation should be based on the purchase price of the property or the prevailing market rental value. (Para 4 , 5 )
3. Calculating compensation based on a percentage return on the purchase price is legally unsound and fails to reflect actual market rental value. (Para 7 )
4. High Court order set aside; matter remanded for fresh determination of compensation based on market rental value. (Para 8 )
5. Can the purchase price of a property be the basis for fixing monthly compensation during a stay of eviction?
No, using the purchase price and a fixed rate of return is not a sound legal principle, as it may result in unreasonable compensation depending on when the property was acquired. (Para 7 )
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned order passed by the High Court of Judicature at Bombay dated 05.11.2020 in Civil Revision Application No. 357 of 2017 by which while admitting the revision application preferred by the contesting respondents herein – original revisionists against the judgment and decree passed by the Appellate Bench of the Court of Small Causes at Mumbai and while staying the judgment and decree passed by the Appellate Bench, the High Court has directed the respondent No. 1 -original revisionist to deposit Rs. 2,50,000/-per month towards the compensation/mesne profit, the original lessor has preferred the present appeal.
2. At the outset, it is required to be noted that the property in question is situated in Worli area of Mumbai, which is in the heart of the city, at a very prominent place. The land on which the superstructure is constructed by the lessor was leased by the lessee by Lease Deed dated 16.08.1949 for a period of 30 years. The original lessee erected a building comprising of ground and four upper storeys, known as “Garment House”. In front of the “Garment House”, there were two chawl-like structures having about 20 tenements. According to the original plaintiffs – lessors, on or about 22.01.1968, after the death of the original lessor, his legal heirs entered into a supplementary indenture of lease permitting the original lessee to demolish the old structures standing on the property and erect new structures. The duration of the supplementary lease was for a period of 98 years commencing from 01.02.1968.
2.1 On or about 01.04.1987, the original lessee died. The original lessee executed a last will and testament creating inter alia a charitable trust and appointing the appellant herein and one Amritlal Gordhandas Jajal as executors and trustees. That thereafter in or about 1988, the eviction proceedings were initiated. By judgment and decree dated 25.06.2004, the Trial Court dismissed the suit. The decree was challenged by the original plaintiffs before the Appellate Bench of the Court of Small Causes. During the pendency of the appeal, one Sumer Corporation, claiming to be a transferee of the suit property from the legal heirs of the original lessors by a registered deed of conveyance, applied for joinder to the appeal. By its judgment and order dated 04.05.2017, the Appellate Bench of the Small Causes Court allowed the appeal and set aside the decree passed by the Trial Court and decreed the suit ordering eviction of the defendants (including the original revisionist).
2.2 Being aggrieved, the contesting respondents herein – original revisionist has filed the revision application before the High Court. During the pendency of the Civil Revision Application (CRA), the appellant – Sumer Corporation applied for impleadment and was added as respondent No. 19 to the CRA.
2.3 At this stage, it is required to be noted that the appellant herein – Sumer Corporation, respondent No. 19 before the High Court is claiming to have right, title and interest in the suit property (lease) pursuant to the deed of conveyance executed in the year 2008 for a sale consideration of Rs. 5.50 crores.
2.4 By the impugned order, while admitting the revision application preferred by the original revisionist, who is aggrieved of the decree passed by the Appellate Bench of the Small Causes Court and while staying the eviction decree passed by the Appellate Bench, the High Court has directed the original revisionist to deposit Rs. 2,50,000/-per month towards compensation as a condition of stay. The High Court has further directed the original revisionist to furnish a security for the arrears of compensation payable from 02.04.2018 and till the date of the impugned order and a sum of Rs. 77,55,000/-as by deposit of a fixed deposit receipt of like amount endorsed in favour of the Registrar General of the High Court at Bombay. The High Court has further directed that the aforesaid compensatio
