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2019 Supreme(Online)(MP) 1781

MADHYA PRADESH HIGH COURT
S.K. Awasthi, J
Gwalior Distillers Limited (M/s.) v. State of M. P. and Others
Civil Suit No. 60 - A / 1998



Retrospective rent increases without consent or assessment are impermissible under applicable regulations.

Headnote:This case focuses on the principles governing rental agreements and the legality of retrospective rent increases. The plaintiff sought a declaration that the defendants had no right to enhance the rent without consent, which the trial court dismissed. The appellate court found the enhancement impermissible due to lack of consent, non-assessment of rent, and reliance on a governmental circular prohibiting retrospective increases. Ultimately, the appellate court reversed the trial court’s decision, allowing the appeal and ordering a refund of enhanced rent.

Table of Content
1. facts surrounding the rental agreement and enhancements. (Para 2 , 3 , 4 , 5 , 6)
2. arguments against the trial court's decision. (Para 11 , 12)
3. court's observations and analysis on the wrongful actions of defendants. (Para 14 , 15 , 16 , 17)
4. final ruling and granting of the appeal. (Para 19 , 20 , 21)

1. With the consent of parties, this appeal is disposed of finally.

2. This first appeal is being preferred by the plaintiff / appellant being aggrieved by the judgment and decree dated 29/01/2001 passed by Additional District Judge, Guna in Civil Suit No. 60 - A / 1998, whereby, the suit seeking declaration that the respondents / defendants do not have any right to enhance the rent with retrospective effect and to declare the demand made by defendants as arbitrary along with the relief of injunction, has been dismissed.

3. The facts relevant and necessary for decision in the appeal are that the appellant / company is registered Company under the provisions of Companies Act , 1956 and is carrying on the business of manufacturing, bottling and supplying country liquor. The respondents No. 4 & 5 are officers of the Excise Department who granted license to the plaintiff to carry on the business. The defendants No. 3 & 7 are employees of Public Works Department (for brevity, "PWD") and they are having warehouse under their control. The plaintiff was granted license to supply country liquor in District Guna for which the defendant No. 7 / Executive Engineer lease out various warehouses on rent. The said warehouse was leased out with the consent of respondents / defendants No. 4, 5 & 6. The rent deed was in possession of the defendants and was never handed over to the plaintiff / appellant. The defendants No. 4 & 5 collected the rent from the plaintiff and deposited the same with the PWD.

4. As per plaint, the rent fixed for each warehouse situated in Guna District are as under : -
(i) Guna warehouse - Rs.125.55 paisa
(ii) Ashoknagar warehouse - Rs. 72.65 paisa
(iii) Mungawali warehouse - Rs.55.25 paisa
(iv) Chachoda warehouse - Rs.53.10 paisa

5. The aforesaid rent was enhanced in the year 1983. After enhancement, the rent of the warehouse are as under : -
(1) Guna warehouse - Rs. 278/-
(2) Ashoknagar warehouse - Rs. 278/-
(3) Mungawali warehouse - Rs. 208/-
(4) Chachoda warehouse - Rs. 208/-

6. The plaintiff had paid entire rent upto June, 1994. Since the enhanced rent was recovered by the respondents without any agreement or without any consent with retrospective effect, the appellant was left with no other option, but to approach the court having competent jurisdiction by filing the suit for declaration and permanent injunction.

7. The defendants No. 1, 2, 4 to 6 had filed their written statement, but defendants No. 3 & 7 (PWD) did not choose to file written statement and have not denied the plaint allegations.

8. Thereafter, following issues were framed by the trial court : -
(Editers Note: Vernacular Matter Omitted)

9. Both the parties have led their respective evidence.

10. The trial court after evaluation of the evidence available on record vide impugned judgment and decree dated 29/01/2001 dismissed the suit filed by the plaintiff.

11. The plaintiff / appellant had filed a suit for declaration and permanent injunction inter - alia contending that the rent deed was never handed over to the plaintiff. The defendants without any notice enhanced the rent with retrospective effect w.e.f. 19/09/1983 which was deducted from the cost price money of the plaintiff / company out of the amount which was deposited with the Excise Department. According to the agreement, rent could not have been enhanced with retrospective effect. There was no condition in the rent deed to enhance the rent. No assessment was carried out regarding enhancement of the rent and without taking consent of the plaintiff, the rent has been enhanced unilaterally which is impermissible. The plaintiff had initially preferred a W.P. No. 1370/1992 which was dispos



















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