Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7774 OF 2022
(@ SLP (C) No. 16019 of 2020)
Sumer Corporation …Appellant(s)
Versus
Vijay Anant Gangan & Ors. …Respondent(s)
J U D G M E N T
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
Signature Not Verified
Digitally signed by
NIRMALA NEGI
Date: 2022.11.09
17:25:04 IST
Reason:
deposit Rs. 2,50,000/- per month towards the compensation / mesne
profit, the original lessor has preferred the present appeal.
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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
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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
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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 compensation shall be payable w.e.f. the date
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of passing of the order by the Court, i.e., on or before 10 day of each
succeeding month beginning from December 2020.
2.5 Feeling aggrieved and dissatisfied with the impugned order of
interim compensation, the original respondent No. 19 has preferred the
present appeal.
3. Shri C.U. Singh, learned Senior Advocate appeared on behalf of
the appellant and Shri Shekhar Naphade, learned Senior Advocate has
appeared on behalf of the contesting respondent – original revisionist.
Shri Siddhartha Dave, learned Senior Advocate has appeared on behalf
of some of the respondents, who also claim right, title and interest in the
property in question.
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4. Shri C.U. Singh, learned Senior Advocate appearing on behalf of
the appellant has vehemently submitted that in the facts and
circumstances of the case, the High Court has committed a very serious
error in directing the original revisionist to deposit the compensation @
Rs. 2,50,000/- per month only while staying the judgment and order
passed by the Appellate Bench.
4.1 It is vehemently submitted by Shri C.U. Singh, learned Senior
Advocate appearing on behalf of the appellant that the method adopted
by the High Court while determining the monthly compensation is
untenable and unsustainable. It is submitted that the High Court has
determined the monthly compensation by considering the amount paid
by the appellant for the purchase of the property in question, i.e.,
Rs. 5.50 crores and considering 6.5% return.
4.2 It is submitted that market value of the property at which the lessor
and/or its subsequent purchaser acquired the property could not be the
basis for fixing the monthly compensation. It is submitted that as per the
settled position of law, the valuation of the property on the date of decree
can be the relevant consideration for the purpose of determining the
monthly compensation.
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4.3 Relying upon the decision of this Court in the case of Atma Ram
Properties (P) Ltd. Vs. Federal Motors (P) Ltd., (2005) 1 SCC 705
(para 19), it is vehemently submitted by Shri C.U. Singh, learned Senior
Advocate appearing on behalf of the appellant that as observed by this
Court while passing an order of stay, the Appellate Court does have
jurisdiction to put the applicant on such reasonable terms as would in its
opinion reasonably compensate the decree-holder for loss occasioned
by delay in execution of decree by the grant of stay order, in the event of
the appeal being dismissed. It is further submitted that as observed by
this Court the tenant is liable to pay mesne profits / compensation for
use and occupation of the premises at the same rate at which the
landlord would have been able to let out the premises and earn rent if
the tenant would have vacated the premises. The landlord is not bound
by the contractual rate of rent effective for the period preceding the date
of the decree.
4.4 It is submitted by Shri C.U. Singh, learned Senior Advocate
appearing on behalf of the appellant that in the present case, the
appellant produced and relied upon the valuation report of one
Mr. Maniyar, who worked out the monthly compensation on the basis of
the value of the property. It is submitted that as per the Valuation Report
of Mr. Maniyar, the compensation could have been arrived at
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Rs. 67,76,038/- per month. It is submitted that, however, ignoring the
detailed Valuation Report, of Mr. Maniyar, the High Court has
determined a very meagre amount towards compensation, i.e., Rs.
2,50,000/- per month with respect to the lands located in the heart of the
city - at Worli and which is in the prime location. It is submitted that
therefore, fixing the compensation at Rs. 2,50,000/- per month with
respect to such a huge land situated in the prime location would be
unreasonable and therefore the same is liable to be interfered with by
this Court.
4.5 Shri C.U. Singh, learned senior counsel appearing on behalf of the
appellant has submitted that the decision of this Court in the case of
Atma Ram Properties (P) Ltd. (supra) has been subsequently followed
by this Court in the case of State of Maharashtra and Anr. Vs. Super
Max International Private Limited and Ors., (2009) 9 SCC 772. It is
submitted that in the subsequent decision in the case of Super Max
International Private Limited and Ors. (supra) , this Court has again
reiterated the law laid down in the case of Atma Ram Properties (P)
Ltd. (supra).
4.6 Making above submissions, it is prayed to allow the present
appeal.
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5. Shri Shekhar Naphade, learned Senior Advocate appearing on
behalf of the respondent No. 1- original revisionist has while opposing
the submissions made on behalf of the appellant has submitted that the
power of the Appellate Court to award the compensation while staying
the decree of eviction is not disputed. However, he has submitted that
the compensation, which may be awarded shall be reasonable and may
not be excessive, even as observed by this Court in the case of Atma
Ram Properties (P) Ltd. (supra) and Super Max International Private
Limited and Ors., (supra). It is submitted that in the present case, the
superstructure has been constructed by the lessee and only the land
was leased. It is submitted that the decree has been passed with
respect to the land and not with respect to the superstructure. It is
submitted that therefore while fixing the monthly compensation, the
aforesaid aspect is required to be borne in mind.
5.1 It is submitted that in the present case, by giving a detailed
reasoning, the Hon’ble High Court has discarded and/or not believed the
valuation report of Mr. Maniyar, relied upon by the appellant. It is
submitted that while determining compensation @ Rs. 67,76,038/-, the
valuer has relied upon and had taken into consideration the Ready
Reckoner rate of the land with applicable permissible FSI. It is submitted
that thereafter and after discarding the valuation report relied upon by
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the appellant, considering the fair rate of return on the amount invested
by the appellant @ 6.5% per annum comes out to Rs. 19,50,000/-.
Therefore, the Hon’ble High Court has rightly determined the monthly
compensation @ Rs. 2,50,000/-, which can be said to be a reasonable
monthly compensation, which is not required to be interfered with by this
Court.
5.2 Making above submissions, it is prayed to dismiss the present
appeal.
6. Shri Siddhartha Dave, learned Senior Advocate appearing on
behalf of the proforma respondent, who was also claiming some right,
title and interest in the property in question has supported the appellant.
7. Having heard the learned Senior Advocates appearing on behalf of
the respective parties and having gone though the impugned order
passed by the High Court determining the monthly compensation @
Rs. 2,50,000/-, we are of the opinion that the approach adopted by the
High Court is not a sound principle of law to form the basis for
determining the compensation in this case. In the present case, while
determining the monthly compensation, the High Court has considered
the fair rate of return @ 6.5% annually on the amount for which the
appellant purchased the property in the year 2008, i.e., Rs. 5.50 crores.
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The aforesaid could not have been the basis while determining the
monthly compensation. If the approach adopted by the High Court is
accepted and/or approved, in a given case, it may happen that the
lessor might have purchased the property forty years back and/or long
back and if the said approach is considered and thereafter the monthly
compensation is determined, the same cannot be said to be a
reasonable compensation. The aforesaid would be contrary to the law
laid down by this Court in the case of Atma Ram Properties (P) Ltd.
(supra) and further reiterated by this Court in the case of Super Max
International Private Limited and Ors., (supra).
7.1 As observed and held by this Court in the case of Atma Ram
Properties (P) Ltd. (supra) , from the date of the decree of eviction, the
tenant is liable to pay mesne profits or compensation for use and
occupation of the premises at the same rate at which the landlord would
have been able to let out the premises and earn rent if the tenant would
have vacated the premises. The landlord is not bound by the contractual
rate of rent effective for the period preceding the date of the decree.
7.2 The decision in the case of Atma Ram Properties (P) Ltd.
(supra) has been subsequently followed by this Court in the case of
Super Max International Private Limited and Ors., (supra). In the
said decision, it is further observed and held that in fixing the amount
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subject to payment of which the execution of the order/decree is stayed,
the Court would exercise restraint and would not fix any excessive,
fanciful or punitive amount. Therefore, in a revision / appeal preferred
by the tenant, who has suffered an eviction decree, the appellate /
revisional court while staying the eviction decree can direct the tenant to
pay the compensation for use and occupation of the tenancy premises
upon the contractual rate of rent and such compensation for use and
occupation of the premises would be at the same rate at which the
landlord would have been able to let out the premises and earn rent if
the tenant would have vacated the premises. In the present case, the
High Court has not done that exercise and has determined the
compensation considering the market value / value at which original
respondent No. 19 acquired the rights of the suit property for a sum of
Rs. 5.50 cores and thereafter, considering estimated return @ 6.5% per
annum, the High Court has determined/awarded the compensation for
use and occupation of the premises by the tenant @ Rs. 2,50,000/- per
month. The aforesaid method adopted by the High Court while
determining the compensation cannot be accepted. The High Court was
required to undertake exercise and to determine the compensation at the
same rate at which the landlord would have been able to let out the
premises and earn rent if the tenant would have vacated the premises.
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7.3 Under the circumstances, the matter is to be remanded to the High
Court for fresh determination of the compensation for use and
occupation of the premises by the tenant, who has suffered the eviction
decree, during the pendency and the final disposal of the revision
application by the High Court.
8. In view of the above and for the reasons stated above, the present
appeal succeeds in part. The impugned judgment and order passed by
the High Court determining the compensation for the use and occupation
of the premises by the tenant @ Rs. 2,50,000/- per month is hereby
quashed and set aside. The 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
the observations made hereinabove. For that purpose, the 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. The aforesaid exercise be completed within a period of
six months from the date of the receipt of the present order. Till a fresh
decision on remand is taken by the High Court, by way of interim
arrangement and subject to further decision that may be taken by the
High Court on remand, we direct the respondent No. 1 to deposit the
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compensation at-least @ Rs. 2,50,000/- per month from the date of
passing of the eviction decree, however, as observed hereinabove, the
same shall be subject to the final decision / determination of
compensation on remand.
Present appeal is accordingly partly allowed to the aforesaid
extent. No costs.
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
NOVEMBER 09, 2022. [M.M. SUNDRESH]
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