The main legal point established in the judgment is the application of the mean average principle to determine fair market rental and mesne profits in a lease dispute.

PRADEEP NANDRAJOG, J

1. Heard learned counsel for the parties.

2. Jural relationship between the appellant and the respondent commenced, when the respondent let out property No.Z-9, Rajouri Garden, New Delhi, for purpose of setting up a CGHS dispensary, to the appellant vide lease-deed dated December 2, 1968 at a monthly rent of Rs.1,250/-.

3. Duration of the lease being 5 years, was extended from time to time with mutual consent; increasing the monthly rent as well, and in this manner the parties last agreed for lease to be extended in the year 1994. The monthly lease rent agreed to was Rs.34,915/-and the lease period stood extended upto the mid-night of August 27th and 28th, 1999.

4. As the lease expired by afflux of time on the mid-night of the date afore-noted, parties could not agree to mutual terms upon which the lease could be extended, resulting in the respondent issuing a legal notice dated September 22, 1999 calling upon the appellant to not only vacate the tenanted premises but additionally pay mesne profits @Rs.30,000/-per month, in addition to the agreed rent. The agreed rent being Rs.34,915/-per month, mesne profits claimed by the respondent would obviously be Rs.64,915/-per month.

5. Since the appellant did not pay heed to the legal notice, the respondent was constrained to file a civil suit seeking ejectment of the appellant as also damages i.e. mesne profits on account of unauthorised occupation of the leased premises with effect from August 28, 1999.

6. Since the suit was resisted on the strength of an arbitration clause in the lease deed between the parties, appellant and the respondent ultimately got the suit disposed of, recording a statement made on behalf of the appellant that it would vacate the tenanted premises, of which it was continuing to occupy possession without legal authority, on the mid-night by February 27 and 28, 2005. It was also agreed between the parties that the issue of mesne profits be referred to an Arbitrator.

7. The appellant vacated the premises on February 27, 2005. Thus, what fell in the lap of the learned Arbitrator was the mesne profits which the appellant had to pay to the respondent for the period August 28, 1999 till February 27, 2005.

8. Before the learned sole Arbitrator, the respondent led evidence that property bearing Municipal No.J-2/15A, B.K.Dutt Market, Rajouri Garden, New Delhi had been let out at a monthly rent of Rs.2,17,025/-pursuant to a lease-deed dated January 15, 2000.

9. As against that, the appellant relied upon a rent assessment figure determined by the Hiring Committee of CPWD which submitted its report on February 10, 2004 opining that upon the recognized principle of valuation of properties fair monthly rent effective from August 28, 1999 would be Rs.46,797/-per month and if fair rental was determined with reference to the prevailing market rent, the same would be Rs.1,09,497/-per month.

10. The learned Arbitrator negated the evidentiary worth of the lease-deed pertaining to the property No.J-2/15A, B.K.Dutt Market, Rajouri Garden, New Delhi; holding that the said property was a commercial property in a market. The learned Arbitrator held that the subject property was a residential property. Accordingly, the learned Arbitrator determined the mesne profits with reference to the assessment made by the Hiring Committee of CPWD and in relation thereto, adopted the rental determined on the recognized principle of valuation. Thus, the learned Arbitrator held that the mesne profits payable would be Rs.46,797/-per month.

11. A technical error crept into the award inasmuch as the mesne profits had to be determined for the period August 28, 1999 till February 27, 2005. The learned Arbitrator determined the mesne profits for the period August 27, 2001 till February 27, 2005.

12. The respondent filed objections to the award which have been disposed of by the learned Single Judge vide impugned order dated March 12, 2007 disposing of OMP No.85/2006 filed by