Supreme Court: A batch of Interlocutory Applications were filed in a Special Leave Petition (Civil) against a decision of the Calcutta High Court, wherein, while answering the question that whether the West Bengal Tenancy Act, 1997 (‘Tenancy Act’) or the (‘TP Act’) was to be applied for framing of the issues in the instant landlord-tenant dispute, held that the Tenancy Act would govern the same. The petitioner-landlord, whilst the pendency of the SLP sought direction for payment of rent and other associated benefits for the property. The Division Bench of JK Maheshwari and Sanjay Karol*, JJ. directed the tenant to deposit Rs.5,15,05,512/- with the Registry of the Court. The Bench also held that mesne profits are payable on continuation of possession by tenant after expiry, determination, forfeiture or termination of lease.
Genesis
The property in question is a commercial hub in Dalhousie, Kolkata. The lease Agreement inter se the parties was entered into on 23-02-1991 executed by the predecessor-in-interest of the petitioner/ landlord. It is alleged that the respondent has been in default on payment of rent since 2002 and in default on payment of his share of municipal tax since 1996. Due to alleged non- payment of rent, the lease was forfeited, and the petitioner initiated proceedings for ejectment under the TP Act, seeking inter alia, recovery of possession by eviction of respondent- tenant; permanent injunction against the tenant and his agents, servants, employees or associates etc., from alienating, transferring or parting with possession of the property. The tenant, in opposition, filed an application seeking the rejection of the plaint, on the grounds of jurisdiction, and for the premises to be governed under the Tenancy Act alleging particularly that, possession was sought in respect of a lease that is yet undetermined, however, the same came to be rejected by the Civil Court. The High Court, in its Civil Revisional Jurisdiction under Article of the , vide order dated 31-03-2015 upheld the dismissal of the application under Order VII Rule 11. Eventually, the Court vide judgment and order dated 12-12-2018 directed the remand of the matter. The Civil Court answered the issues, whether the suit was triable under the Tenancy Act or the TP Act 1; and whether the suit is maintainable as framed or at all, in favour of the plaintiff, primarily on the ground that since the tenancy, subject matter of the suit, was created with w.e.f. 20-11-1992 and the Tenancy Act came into force w.e.f. 10-07-2001.
Vide, the impugned decision, the High Court while upholding the jurisdictional issue in favour of the tenant, dismissed all the four suits filed by the plaintiff for not being maintainable. In the matter at hand the reasoning adopted by the High Court was not within the scope of the present adjudication. During the pendency of the Special Leave Petitions Interlocutory Applications were filed seeking direction for payment of rent and other associated benefits for the property which is the subject matter of the present dispute.
Whether the High Court’s holding that the tenant is governed by the Tenancy Act, was legally sustainable or not?
Analysis and Decision
The Court noted that the lease was ‘forfeited’ due to non-payment of rent by the tenant. The Court noted that ‘forfeiture’, has been defined by Corpus Juris Secundum is “the right of the lessor to terminate a lease because of lessee’s breach of covenant or other wrongful act”. The Court referred to Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd., , wherein it was observed that “the tenant having suffered an order for eviction must comply and vacate the premises. His right of appeal is statutory but his prayer for grant of stay is dealt with in exercise of equitable discretionary jurisdiction of the appellate court. While ordering stay the appellate court has to be alive to the fact that it is depriving the successful landlord of the fruits of the decree and is postponing the execution of the order for eviction. There is every justification for the appellate court to put the appellant tenant on terms and direct the appellant to compensate the landlord by payment of a reasonable amount which is not necessarily the same as the contractual rate of rent.”
The Court reiterated that tenants shall be liable to pay a rent equivalent to mesne profit, from the date they are found not to be entitled to retain possession of the premises in question. The Court also referred to Martin and Harris (P) Ltd. v. Rajendra Mehta, , wherein on the point of determination of the mesne profits, it was laid down that the basis of determination of the amount of mesne profits, depends on the facts and circumstances of each case considering the place where the property is situated i.e. village or city or metropolitan city, location, nature of premises i.e. commercial or residential area and the rate of rent precedent on which premises can be let out are the guiding factor in the facts of individual case.
The Court upon perusal of the several judgments, added that, once the decree of eviction stands passed and the same having been stayed, gives rise to the question of payment of mesne profit. The Court said that that a tenant who entered the property in question lawfully, continues in possession after his right to do so stands extinguished, is liable to compensate the landlord for such time period after the right of occupancy expires. The Court referred to Indian Oil Corporation Ltd. v. Sudera Realty Private Limited, , whereby it was laid down that the tenant while continuing in possession ‘after the expiry of the lease’ became liable to pay mesne profits. However, the Court viewed that, the effect of the words ‘determination’, ‘expiry’, ‘forfeiture’ and ‘termination’ would be subject to the facts and when any of these three words are applied to a lease, henceforth, the rights of the lessee/tenant stand extinguished or in certain cases. Therefore, the Court held that in any of these situations, mesne profit would be payable.
The Court also noted from the submissions that the lease deed was disputed, in terms of its continuation or forfeiture on account of non-payment, hence, so was the nature of payment to be made.
Hence, taking a lock stock and barrel view of the present dispute, the averments, the documents placed, the Court, prima facie viewed, that the tenant was delaying the payment of rent and/or other dues, payable to the petitioner- landlord and such denial of monetary benefits accruing from the property, when viewed in terms of the unchallenged market report forming part of the record was undoubtedly substantial and as such, subject to just exceptions, the Court directed for deposit of the amount claimed by the petitioner-landlord, to ensure complete justice inter se the parties. The Court added that the very purpose for which a property is rented out, is to ensure that the landlord by way of the property is able to secure some income. If the income remains static over a long period of time or in certain cases, as in the present case, yields no income, then such a landlord would be within his rights, subject of course, to the agreement with their tenant, to be aggrieved by the same.
However, the Court clarified that, since the Special Leave Petitions were pending, the directions herein are subject to the final outcome of the final outcome. Hence, considering the location of the demised premises in the heart of Kolkata, the rent as agreed, the alleged non-payment of rent, the default in payment of interest, as alleged, and other such like factors, the Court accepted the calculation of dues made by the petitioner-landlord. Thus, the Court directed the tenant to deposit Rs.5,15,05,512/- with the Registry of the Court within four weeks from the date of decision.
CASE DETAILS
| Citation: Appellants : Bijay Kumar Manish Kumar Huf Respondents : Ashwin Bhanulal Desai | Advocates who appeared in this case For Appellant: For Respondent: |
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