Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 464647 OF 2022
[ARISING OUT OF SLP(C) NOS.2024344 OF 2019
M/s. Martin & Harris Private Limited & Anr. …Appellants
Versus
Rajendra Mehta & Ors. ...Respondents
J U D G M E N T
J.K. Maheshwari, J.
Signature Not Verified
Digitally signed by
Rachna
Date: 2022.07.06
16:48:33 IST
Reason:
Leave granted.
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2. Plaintiffs/Respondents being the owners of the suit property
situated at Plot No.1, Block No.D1, Nagar Nigam No.2844 known
as Khinduka Bhawan, New Colony, Jaipur filed a suit bearing
No.4/2016 (9/2002) for eviction, possession, recovery of rent and
permanent injunction. The said suit was filed in November 2002
invoking the Provisions of Section 13 of the Rajasthan Premises
(Control of Rent and Eviction) Act, 1950 (hereinafter referred as ‘Old
Act’). The suit was decreed vide judgment dated 03.06.2016 passed
by Senior Civil Judge No.7, Jaipur. On filing the appeal bearing
No.11/2016 before Additional District Judge No.10, Jaipur, it was
dismissed on 10.01.2017 confirming the judgment of the Trial
Court. The Second Appeal No.144/2017 was filed challenging both
the judgments before the High Court which was admitted vide order
dated 14.10.2017 granting stay on ejectment. The order of stay was
extended time to time. On filing an application under Order XLI
Rule 5 read with Section 151 of the Code of Civil Procedure (in short
‘CPC’) by the Plaintiffs/Respondents asking mesne profit due to
continuation of stay on eviction decree it was decided vide order
dated 18.05.2018. Whereby the appellants were directed to pay the
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mesne profit @ Rs.2,50,000/ per month from the date of filing of
the application i.e. 20.12.2017 till disposal of the appeal. The
directions have also been issued to deposit the arrears of mesne
profits upto April 2018 by depositing the same in the bank account
of the Plaintiffs within six months, with further direction to pay
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mesne profits from May 2018 consecutively by 15 date of every
succeeding month. Failing to deposit the amount of mesne profit in
future for four months consecutively, Plaintiffs would have right to
get execute the decree of eviction. The Plaintiffs were granted liberty
to withdraw the amount subject to furnishing surety and
undertaking to redeposit the mesne profits so withdrawn with 9%
interest in case they lose in the second appeal. The said order was
challenged by filing the Special Leave Petition No.19863/2018
before this Court, which was dismissed as withdrawn with liberty to
the Appellants to file review petition before the High Court. On filing
the review petition bearing No.95/2018, it was dismissed vide order
dated 01.04.2019 which led to file the present appeals challenging
the order dated 18.05.2018 as well as the order passed in review
dated 01.04.2019 questioning the grant of mesne profit.
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3. The facts unfolded are that the Plaintiffs purchased the
property through six different registered sale deeds executed on
23.12.1985. By virtue of those sale deeds, Plaintiffs became the
owner of the tenanted premises. Appellants were tenant to the
erstwhile owner and after selling the premises they became tenant
of Plaintiffs/Respondents by attornment. Earlier a suit under
Section 6 of the Old Act was filed by the Plaintiffs/Respondents
against the Appellants bearing No.61 of 2002 for determination of
the standard rent. During the pendency of the suit an application
under Section 7 of the Old Act was filed for fixing the provisional
rent which was decided vide order dated 09.01.2004 fixing
provisional rent @ Rs.1,00,000/ per month. The said order was
challenged, which was confirmed by the High Court vide order
dated 18.04.2007. The Appellants had filed a Special Leave Petition
bearing No.9775 of 2007 wherein this Court fixed the ad hoc
provisional rent @ Rs.60,000/ per month vide order dated
12.11.2007 with direction to the Trial Court to decide the issue of
standard rent expeditiously. The Trial Court vide judgment dated
12.08.2009 decreed the said suit and fixed the standard rent @
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Rs.45,000/ per month. The appeals filed by both the parties
against the said order are pending before the High Court.
4. In the present appeals the order of the High Court directing to
pay the mesne profits @ Rs.2,50,000/ per month with other
ancillary directions have been questioned. It is contended by
learned counsel for the Appellants that as per Section 20 of
Rajasthan Rent Control Act, 2001 (hereinafter referred as ‘New Act’),
the maximum amount of mesne profit may be payable three times
of the standard rent in case the premises is let out for commercial
purposes. It is said the mesne profit, as determined by the High
Court, is excessive without looking to the year of construction of
premises, location of the property which is on inside road of colony
and also without taking note of the DLC rate, therefore, the order
impugned may be set aside and the quantum of mesne profits may
be revised to three times of the amount of rent making it
Rs.1,35,000/ per month.
5. Per contra, learned counsel representing the Plaintiffs has
strenuously urged that Section 20 of the New Act do not apply to
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the suit or proceedings initiated under the Old Act and were
pending on the date of applicability of the New Act i.e. 01.04.2003,
notified in the official gazette. The argument of the Appellants to fix
mesne profits only three time to the standard rent relying the
provisions of the New Act is meritless. The High Court said that the
suit property is located on the main road of New Colony, Jaipur
situated in the heart of the City being commercial area rightly fixed
mesne profit. It is also urged that the order passed by the High
Court to fix mesne profit is equitable, just and reasonable with a
direction to redeposit of mesne profits with 9% interest in case of
withdrawal by Plaintiffs or the Plaintiffs loses in the second appeal.
In such circumstances, interference in these appeals is not
warranted.
6. After having heard learned counsel appearing on behalf of
both the parties, it is not in dispute that in the previous
proceedings bearing No.61 of 2002 filed under Sections 6 and 7 was
under the Old Act, wherein the standard rent was fixed Rs.45,000/
per month to the suit property. During those proceedings, the
present suit seeking decree of eviction was filed by Plaintiffs under
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the provisions of Old Act in November 2002 prior to commencement
of the New Act. Thus, on the date of commencement of the New Act,
the present suit was pending and vide judgment dated 03.06.2016
Trial Court decreed the suit, which was confirmed in appeal by
Lower Appellate Court on 10.01.2017. Challenging the judgment
and decree concurrently passed by the two Courts, Second Appeal
No.144/2017 has been filed by the Appellants, which has been
admitted on 14.10.2017 and stay of ejectment passed by the High
Court which was extended quite a few times. Thereafter, on filing an
application under Order XLI Rule 5 read with Section 151 of CPC
asking mesne profits by Plaintiffs, it was allowed vide order dated
18.05.2018. Against which the Special Leave Petition bearing
No.19863/2018 filed by Appellants was dismissed as withdrawn
with liberty to file a review petition after noting the submissions
made before this Court. The said order dated 06.08.2018 is
relevant, therefore, for ready reference reproduced as under:
“Mr. Mukul Rohatgi, learned Senior Counsel
appearing on behalf of the petitioners, submits that
under Section 20 of the Rajasthan Rent Control
Act, 2001, the maximum that is payable by way of
mesne profits is three times the rent in the case of
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premises let out for commercial purposes. He
submits that the standard rent for the premises
has been fixed at Rs.45,000/ as a result of which,
three times would amount to a figure of
Rs.1,35,000/. What has been awarded, however,
by the High Court is Rs. 2,50,000/ per month.
We note this submission and permit the learned
Senior Counsel to withdraw this petition and
approach the High Court in review.
In view of the above, the Special Leave Petition is
dismissed as withdrawn.
In the event the review petition is dismissed, liberty
is granted to challenge the original order as well.”
On perusal of the order, it is clear that the Appellants raised a plea
that maximum payable mesne profits as per Section 20 of the New
Act can be three times of the rent in case the premises let out for
commercial purposes. It was said that the standard rent was fixed
@ Rs.45,000/ per month as a result of which three times would
come to Rs.1,35,000/, however, the direction of mesne profits @
Rs.2,50,000/ per month by the High Court is unjust. This Court
without expressing any opinion with respect to fixing the quantum
of mesne profits directed to approach the High Court by filing the
review.
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7. On filing the review petition bearing No.95/2018, the
appellants have taken the said plea and also stated that the Court
in the order under review wrongly mentioned the letout area as
407 sq. yard including 1200 sq. ft. court yard passage, in fact, the
said area was a common passage for all. Therefore, the mesne profit
of the said area cannot be determined against Appellants. The High
Court noted that the case in hand shall be governed by the
provisions of the Old Act. In the light of the said undisputed factual
position, it was observed that the argument regarding applicability
of Section 20 of the New Act is misconceived. The Court also
observed that in a review petition the Court cannot sit as an
Appellate Court over the order under review until an error apparent
on the face of the record has been pointed out. With the said
observation, the High Court dismissed the review petition.
8. In the above said facts, the argument advanced by the
Appellants in the matter of grant of mesne profit to the extent of
three times to the standard rent in terms of Section 20 of the New
Act is required to be addressed first. Section 20 of the New Act deals
with the execution of the orders of the Rent Tribunal in the manner
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so prescribed. Subsection (3) makes it clear that if the tenant does
not vacate premises within three months of the date of issue of
certificate for recovery of the possession, in that event he is liable to
pay mesne profits at the rate of 2 times the rent in case premises let
out for residential purposes; at the rate of three times the rent in
case of premises let out for commercial purposes as applicable in
the facts of the present case. On the said pretext, it is contended
that the direction of mesne profits more than three times is contrary
to the said provisions. The other side contends that the New Act has
come into force on 01.04.2003 by way of notification published in
the Official Gazette. As per Section 32 of the New Act, the repeal
and savings of the Old Act has been specified. For the said purpose
Section 32 is relevant, therefore, it is reproduced as thus:
“ 32. Repeal and savings . (1) The Rajasthan Premises
(Control of Rent and Eviction) Act, 1950 (Act No. 17 of
1950) shall stand repealed with effect from the date
notified under Subsec. (3) of Sec. 1 of this Act.
(2) The repeal under Subsection (1) shall not affect,
(a) anything dub done or suffered under the
enactment so repealed; or
(b) any right, title, privilege, obligation or liability
acquired or incurred under the enactment so
repealed; or
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(c) any fine, penalty or punishment incurred or
suffered under the provisions of the enactment so
repealed.
(3) Notwithstanding the repeal under Subsection (1).
(a) all applications, suits or other proceedings under
the repealed Act pending on the date of
commencement of this Act before any Court shall be
continued and disposed of, in accordance with the
provisions of the repealed Act, as if the repealed Act
had continued in force and this Act had not been
enacted. However, the plaintiff within a period of
one hundred and eighty days of coming into force of
this Act shall he entitled to withdraw any suit or
appeal or any other proceeding pending under the
repealed Act with liberty to file fresh petition in
respect of the subject matter of such suit or appeal
or any other proceeding under and in accordance
with the provisions of this Act and for the purposes
of limitation such petition shall, if it is filed within a
period of two hundred and seventy days from the
commencement of this Act, be deemed to have been
filed on the date of filing of the suit which was so
withdrawn and in case of withdrawal of appeal or
other proceeding, on the date on which the Suit, out
of which such appeal or proceeding originated, was
filed;
(b) the provision for appeal under the repealed Act
shall continue in force in respect of applications,
suits and proceedings disposed of thereunder;
(c) all prosecutions instituted under the provisions
of the repealed Act shall be effective and disposed of
in accordance with such repealed law;
(d) any rule or notification made or issued under the
repealed Act and in force on the date of
commencement of this Act shall continue to govern
the pending cases.”
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From the aforesaid for the present case only subsection (3) is
relevant, which has been given overriding effect to other provisions
by which the applications or suit or other proceedings filed under
the Old Act (Repealed Act) pending on the date of commencement of
the New Act before any Court shall be continued and disposed of in
accordance with the provisions of the Old Act (Repealed Act) as the
Old Act had continued in force and this Act had not been enacted.
Thus, it is clear that the suit or proceedings, if any, pending on the
date of notification issued by the State Government for applicability
of the New Act such proceedings would continue under the Old Act
and New Act has no application. Therefore, in our considered view,
the High Court has rightly rejected the contention while dismissing
the review petition and rightly held that Section 20 of the New Act,
by which three times mesne profits to the standard rent was made
permissible for the suit or proceedings started under the New Act,
have no application in suit or proceedings initiated under Old Act
and pending on the date of commencement of New Act. In our
considered opinion the reasoning given in the order dated
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01.04.2019, while rejecting the review petition by the High Court, is
perfectly in consonance to the spirit of Section 32 of the New Act.
9. Before the High Court, while passing the original order dated
18.05.2018, it was contended by the Appellants that they are not in
possession of 469.92 sq. meter (5058 sq. ft.). The said issue has
been dealt with on the admitted fact in the earlier proceeding
between the same parties regarding fixation of standard rent in
which the parties came before this Court. In the order Court
referring the affidavit of the Appellants filed before this Court
admitted that the total covered area is 2100 sq. ft. and an open area
of 1200 sq. ft. having total area of 407 sq. yards is a tenanted
premises. In our view also the affidavit filed before this Court in
previous proceedings if considered by the High Court, now the
Appellants are estopped to take different plea disputing the area of
tenancy. Thus, the finding of fact recorded by the High Court do not
warrant any interference.
10. Now, reverting on the issue of determination of the amount of
mesne profits @ Rs.2,50,000/ per month is concerned, the
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guidance may be taken from the judgment of Marshall Sons & Co.
(I) Ltd. vs. Sahi Oretrans (P) Ltd. and Another – (1999) 2 SCC
, in which this Court held that once a decree for possession has
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been passed and the execution is delayed depriving the decree
holder to reap the fruits, it is necessary for the Appellate Court to
pass appropriate orders fixing reasonable mesne profits which may
be equivalent to the market rent required to be paid by a person
who is holding over the property. In the case of Atma Ram
Properties (P) Ltd. vs. Federal Motors (P) Ltd. – (2005) 1 SCC
705 , this Court held that Appellate Court does have jurisdiction to
put reasonable terms and conditions as would in its opinion
reasonable to compensate the decree holder for loss occasioned by
delay in execution of the decree while granting the stay. The Court
relying upon the provisions of the Delhi Rent Control Act, observed
that on passing the decree for eviction by a competent Court, the
tenant is liable to pay mesne profit or compensation for use and
occupation of the premises at the same rate at which the landlord
would have able to let out the premises in present and earn the
profit if the tenant would have vacated the premises. The Court has
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explained that because of pendency of the appeal, which may be in
continuation of suit, the doctrine of merger does not have 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 later date.
11. Thus, after passing the decree of eviction the tenancy
terminates and from the said date the landlord is entitled for mesne
profits or compensation depriving him from the use of the premises.
The view taken in the case of Atma Ram (supra) has been
reaffirmed in the case of State of Maharashtra vs. Super Max
International Pvt. Ltd. and others (2009) 9 SCC 772 by three
Judges Bench of this Court. Therefore, looking to the fact that the
decree of eviction passed by Trial Court on 03.03.2016 has been
confirmed in appeal; against which second appeal is pending,
however, after stay on being asked the direction to pay mesne
profits or compensation issued by the High Court is in consonance
to the law laid down by this Court, which is just equitable and
reasonable.
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12. The basis of determination of the amount of mesne profit, in
our view, depends on the facts and circumstances of each case
considering place where the property is situated i.e. village or city or
metropolitan city, location, nature of premises i.e. commercial or
residential are and the rate of rent precedent on which premises
can be let out are the guiding factor in the facts of individual case.
In the case at hand, the High Court in the impugned order observed
that the tenanted property is located on the main road of New
Colony near Panch Batti which is a commercial area in the heart of
Jaipur City. The said finding has been arrived considering the
voluminous documentary record dispelling the plea taken by the
Appellants. However, the Court in the facts and circumstances
found it reasonable to determine Rs.2,50,000/ per month as
mesne profit. As per the discussion made hereinabove so far as the
area of the tenanted premises and the location of the property is
concerned, the findings of fact have been recorded by the High
Court, in our considered opinion, those findings are based on the
material brought on record which are neither perverse nor illegal.
The amount of mesne profit as fixed @ Rs.2,50,000/ is also just
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and proper looking at the span of time i.e. 10 years from the date of
fixing of the standard rent and six year from the date of passing of
the decree of eviction. Therefore, the amount of mesne profit has
rightly been decided by the High Court while passing the order
impugned.
13. In view of the foregoing discussion, in our considered opinion,
the order fixing the mesne profit and the order passed on the review
petition, filed by the Appellants, are just and proper which do not
warrant any interference. Therefore, both the appeals are
dismissed.
….………..………………...J.
(INDIRA BANERJEE)
….….………………………J.
(J.K. MAHESHWARI)
New Delhi;
July 06, 2022
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