Bijay Kumar Manish Kumar Huf vs. Ashwin Bhanulal Desai

REPORTABLE IN THE SUPREME COURT OF INDIA 2024 INSC 445 CIVIL APPELLATE JURSIDICTION I.A. No.120219/2020 IN Special Leave Petition (C) No.4049 of 2020 BIJAY KUMAR MANISH KUMAR HUF … PETITIONER(S) VERSUS ASHWIN BHANULAL DESAI … RESPONDENT(S) With I.A. No.120227/2020 in SLP(C)No.4050/2020, I.A. No.120235/2020 in SLP(C)No.4051/2020 & I.A. No.120248/2020 in SLP(C)No.4052/2020 J U D G M E N T SANJAY KAROL, J. 1. These petitions for special leave to appeal seek to lay a challenge to the th judgment and order dated 7 November 2019 passed in C.O.Nos.1582-85 of 2019 by the High Court of Calcutta. The learned Single Judge while deciding the issue Signature Not Verified Digitally signed by Nidhi Ahuja Date: 2024.05.17 18:27:47 IST Reason: 1 as to whether the West Bengal Tenancy Act, 1997 or the Transfer of Property 1 Tenancy Act 1| SLP(C) 4049 of 2020 2 Act, 1882 was to be applied for framing of the issues in the instant landlord- tenant dispute, held that the Tenancy Act would govern the same. 2. Impugning the judgment of the learned Single Judge, the present Special Leave Petitions were filed before this Court. However, the reasoning adopted therein is not within the scope of the present adjudication. During the pendency of these Special Leave Petitions interlocutory applications have been filed seeking direction for payment of rent and other associated benefits in connection with the property which is the subject matter of the present dispute. It is these Interlocutory Applications that are sought to be disposed of by way of the present judgment. 3. It would, however, be apposite to have a bird’s eye view of the controversy. It is not in dispute that the lis governs four different tenancies. Due to alleged non- payment of rent, the lease was forfeited, and the petitioner-applicant initiated proceedings for ejectment under the T.P. Act. Suit(s) were filed before the City Civil Court at Calcutta seeking inter alia, a) recovery of possession by eviction of defendant (respondent- tenant herein); b) permanent injunction against the present respondents and his agents, servants, employees or associates etc., from alienating, transferring or parting with possession of the property. The respondent-tenant, in opposition thereto, 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 has been sought in 2 T.P. Act 2| SLP(C) 4049 of 2020 respect of a lease that is yet undetermined; the claim is bad in law, illegal and arbitrary; the suit has been misvalued and the plaint is insufficiently stamped, among others. The same came to be rejected by the concerned Court by order rd 3 dated 3 February 2015 . It was observed: – “…Without a full-fledged trial and evidence the court cannot come to conclusion that the averments made in the plaint are false and frivolous or that there is any suppression of material fact. Notice of determination of lease, if not at all served upon the defendant and if it is mandatory, then the suit may fill in future. But that cannot come under the ambit of the provision of O 7 R 11 CPC. This court cannot take the view for rejection of plaint without giving or affording opportunity to the parties to bring evidence justifying their plea. On the other hand, because of action of the suit has to be found out on the conjoint reading of all paragraphs of the plaint. Because of action does not mean only a date. Above all, the Plaintiff has specifically mentioned cause of action in paragraph 15 of the plaint. The allegations or the averments made in the plaint has to be proved by the Plaintiff had the time of trial by producing evidence and it is the duty of the Plaintiff to prove that the lease has been determined properly or not.” Allowing the matter not to rest there, the respondent-tenant pursued the matter further. The High Court, in its Civil Revisional Jurisdiction under Article st 4 227 of the Constitution of India, vide order dated 31 March 2015 upheld the dismissal of the application under Order VII Rule 11. Eventually, this Court vide th 5 judgment and order dated 12 December 2018 directed the remand of the matter, observing thus: – “9. Taking into consideration the peculiar facts and circumstances of the case, since the suit is still in the preliminary stage, we dispose of the appeal is directing the trial court to frame the issue, relating to the maintainability of the suit and applicability of enactments, as 3 Annexure P 11 of the paper book at page 132 4 Annexure P 12 of the paper book at page 138 5 Annexure P -29 of paper book 3| SLP(C) 4049 of 2020 mentioned supra and decide the same in accordance with law as a preliminary issue as expeditiously as possible, preferably within a period of 6 months from the date of communication of this judgment.” 4. The Trial Court thereafter framed the following issues:- “1. Is the suit triable under the provisions of the W.B.P.T Act, 1997 or the Transfer of Property Act 1882? 2. Whether the suit is maintainable as framed or at all?” 5. The Trial Court in all four suits, answered the issues in favour of the plaintiff, primarily on the ground that since the tenancy, subject matter of the suit, th was created with w.e.f. 20 November 1992 and the Tenancy Act came into force th w.e.f. 10 July 2001. The agreement inter se the parties, therefore, was governed only by the T.P. Act. The observation of the trial court is extracted as under: – “… It is pertinent to mention here that the lease deed was executed on 20.11.1992 for the period of 99 years and the W. B. P. T. Act, 1997 came into force on 10. 07. 01 i.e. much more earlier than the enforcement of the W. B. P. T. Act, 1997 and there is or was no express word in the W. B. P. T. Act, 1997 that alright accrued by any party from the prevailing any law will be extinguished since the W. B. P. T. Act, 1997 came into force on 10. 07.01. Therefore, it can be said that the present suit squarely governed by the T. P. Act and no under West Bengal Premises tenancy act, 1997 and in view of such factual aspect the present is perfectly maintainable…” 6. It is in appeal from such order of the Trial Court that the impugned judgment with particulars as noticed above, came to be passed. The High Court while upholding the jurisdictional issue in favour of the respondent-tenant, dismissed all the four suits of the plaintiff for the same not to be maintainable. Thus, the issue as already observed is as to whether the order passed by the High 4| SLP(C) 4049 of 2020 Court holding the respondent-tenant to be governed by the Tenancy Act, is legally sustainable or not. 7. In these Special Leave Petitions preferred by the landlord, notice was th issued on 17 February 2020. th 8. During the course of the hearing on 15 February 2024 petitioner-applicant (landlord) had offered time to the tenants to vacate the premises. Certain suggestions for amicably resolving the dispute for all times to come were exchanged, and as such the matters were adjourned. We are now informed that the petitioner-landlord’s offer of giving time to the tenant to hand over the vacant possession of the premises stands rejected. Thus, the landlord insisted on the disposal of the applications asking the tenant to pay the rent at the market rate for the lis to have been determined at the institution of the plaint. I.A. No.120219/2020 in SLP(C)No.4049/2020 : 9. The Interlocutory Application bearing the above particulars has been taken as the primary application for the sake of facts. It is noted that similar applications seeking similar prayer have been filed in other special leave petitions which shall be disposed of in accordance with this order. 10. We notice that these applications in issue have been pending for almost three years. 11. The applicant (petitioner in the SLP) seeks direction for payment of ‘ monthly occupational charges ’ following the prevalent market rate. The prayer as made, is reproduced below:- 5| SLP(C) 4049 of 2020 “(a) Direct the Respondent to forthwith pay monthly occupational charges at the rate of INR 41/- (Indian Rupees Forty One) per Square feet, for 1208 Sq.ft = INR 49528/- since August, 2007 during the pendency of the present Special Leave Petition in respect of the present lease in dispute…” 12. Certain facts are required to be taken note of. The property in question is situated in the Dalhousie area, which has been termed as a commercial hub in rd Kolkata. The lease Agreement inter se the parties was entered into on 23 February 1991 executed by the predecessor-in-interest of the petitioner. 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. 13. On account of non-payment of rent, the lease was forfeited/determined. However, the respondent has neither delivered the possession of the property nor paid the rent. The petitioner has submitted a report of an independent valuer dated th 12 March 2020. The assessment of the rentals, made by the valuer, it is submitted, is fair and reasonable @ INR 41/- per Sq.ft. 14. It is submitted on behalf of the respondent that since no court has declared the end of the landlord-tenant relationship, the petitioner-applicant asking the respondent to pay occupational charges as opposed to contractual rent would amount to the re-writing of the tenancy Agreement. Further, it is argued that occupation charges are only payable after the lease is validly determined or after the decree of eviction. Since both these eventualities are yet to occur, no question of such payment arises. It is also urged that the petitioner-applicant accepted rent 6| SLP(C) 4049 of 2020 from the respondent till August 2002 but thereafter refused to do so. According to the respondent-tenant, a total amount of Rs,2,06,400/- is payable on their part to the petitioner-applicant in the following terms :- PARTICULARS

15. On the other hand, the petitioner-applicant’s(landlord) calculation is tabulated as under:-

7| SLP(C) 4049 of 2020 16. Landlord-tenant disputes often make their way to this Court, and obviously, the payment of rent/mesne profit/occupation charges/damages becomes, more often than not a matter of high contest. Determination, as alleged to have taken place by the petitioner, can take place at the instance of both the landlord and the rd tenant. Halsbury’s Laws of England 3 Edn. Vol.23 defines ‘determination by landlord’ as follows : “The tenancy is impliedly determined by the landlord when he does any act on the premises which is inconsistent with the continuance of tenancy; for example, when he re-enters to take possession (b), or puts in a new tenant (c), or cuts down trees or carries away stone (d), the trees and stone not being excepted from the demise (e), and also when he does an act off the premises which is inconsistence with the tenancy, as when he conveys the reversion (f), or grants a lease of the premises to commence forthwith (g). An act done off the premises, however, does not determine the tenancy until the tenant has notice of it (h).” 16.1 According to the petitioner, as already taken note of above, the lease was ‘forfeited’ due to non-payment of rent. Forfeiture, as 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”. Further, it mentions as under : “The word as used in a lease does not, strictly speaking, refer to any right given to the lessee to terminate the lease. Accordingly, it has been held that provisions for forfeiture, cancelation or termination of a lease are usually inserted for the benefit of the lessor and because of some default on the part of the lessee. A forfeiture is in the nature of a penalty of doing of failing to do a particular thing, and results from failure to keep an obligation.” 16.2 It would also be useful to refer to the concept of tenant at sufferance. As defined in the very same treatise, such a tenant is a person who enters upon a land 8| SLP(C) 4049 of 2020 by lawful title,but continues in possession after the title has ended without statutory authority and without obtaining consent of the person then entitled. 16.3 Wharton’s Law Lexicon Seventeenth Edn. discusses ‘tenancy at sufferance’ in the following terms : “ Sufferance, Tenancy at , This is the least and lowest estate which can subsist in realty. It is in strictness not an estate, but a mere possession only it arises when a person after his right to the occupation, under a lawful title, is at an end, continues (having no title at all) in possession of the land, without the agreement or disagreement of the person in whom the right of possession resides. Thus if A is a tenant for yes, and his terms expires, or is a tenant at will, and his lessor dies, and he continues in possession without the disagreement of the person who is entitled to the same, in the one and the other of these cases he said to have the possession by sufferance – that is, merely by permission or indulgence, without any right : the law esteeming it just and reasonable, and for the interest of the tenant, and also of the person entitled to the possession, to deem the occupation to be continued by the permission of the person who has the right, till it is proved that the tenant withholds the possession wrongfully, which the law will not presume. As the party came to the possession by right, the law will esteem that right to continue either in point of estate or by the permission of the owner of the land till it is proved that the possession is held in opposition to the will of that person.” 17. Before adverting to the present facts and claims advanced by the parties it would be appropriate to refer to certain pronouncements of this Court where mesne profit, which is the mainstay of the interlocutory application(s) before us, have been awarded. 17.1 The respondent has referred to Atma Ram Properties (P) Ltd. v. Federal 6 Motors (P) Ltd. to submit that the landlord’s claim for mesne profit is not 6 (2005) 1 SCC 705 9| SLP(C) 4049 of 2020 maintainable, given that, no decree of ejectment stands passed by the concerned civil court. We may refer to the observations made in the said judgment, which are, thus:

x x x x 18. That apart, it is to be noted that the appellate court while exercising jurisdiction under Order 41 Rule 5 of the Code did have power to put the appellant tenant on terms. 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. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) 10| SLP(C) 4049 of 2020

(Emphasis supplied) 17.2 A Bench of three learned Judges in State of Maharashtra & Anr. v. Super 7 Max International Private Limited and Ors observed as under :

x x x x x 68. The learned Judge then referred to some later decisions and (in para 14 at SCC p. 306 of the judgment) quoted a passage from the decision in Joginder Pal v. Naval Kishore Behal [(2002) 5 SCC 397] , to the following effect: ( Joginder Pal case [(2002) 5 SCC 397] , SCC p. 404, para 9) “ 14 . … ‘ 9. … The courts have to adopt a reasonable and balanced approach while interpreting rent control legislations starting with an assumption that an equal treatment has been meted out to both the sections of the society. In spite of the overall balance tilting in favour of the tenants, while interpreting such of the provisions as to take care of the interest of the landlord the court should not hesitate 7 (2009) 9 SCC 772 11| SLP(C) 4049 of 2020 in leaning in favour of the landlords. Such provisions are engrafted in rent control legislations to take care of those situations where the landlords too are weak and feeble and feel humble.’ ” (emphasis in original)

profit, from the date they are found not to be entitled to retain possession of the 8 premises in question. In Achal Misra v. Ram Shanker Singh & Ors. this Court held -

This position was reiterated in Achal Misra (2) v. Rama Shankar Singh 9 & Ors. . 8 (2005) 5 SCC 531 9 (2006) 11 SCC 498 12| SLP(C) 4049 of 2020 17.4 The power to grant stay on the execution proceedings which would then result into an order for payment of mesne profit is what has been described as incidental or subject to the final outcome of the case. This Court has observed, 10 in G.L. Vijain v. K. Shankar as under - “10. It must be borne in mind that incidental power is to be exercised in aid to the final proceedings. In other words an order passed in the incidental proceedings will have a direct bearing on the result of the suit. Such proceedings which are in aid of the final proceedings cannot, thus, be held to be on a par with supplemental proceedings which may not have anything to do with the ultimate result of the suit. 11. Such a supplemental proceeding is initiated with a view to prevent the ends of justice from being defeated. Supplemental proceedings may not be taken recourse to in a routine manner but only when an exigency of situation arises therefor. The orders passed in the supplemental proceedings may sometimes cause hardships to the other side and, thus, are required to be taken recourse to when it is necessary in the interest of justice and not otherwise. There are well-defined parameters laid down by the Court from time to time as regards the applicability of the supplemental proceedings. 12. Incidental proceedings are, however, taken recourse to in aid of the ultimate decision of the suit which would mean that any order passed in terms thereof, subject to the rules prescribed therefor, may have a bearing on the merit of the matter. Any order passed in aid of the suit is ancillary power.” 11 17.5 This Court in Martin and Harris (P) Ltd. v. Rajendra Mehta speaking through one of us (J.K. Maheshwari, J.) observed that - “18. 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 Atma Ram [ Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. , (2005) 1 SCC 705] has been reaffirmed in State of Maharashtra v. Super Max International (P) Ltd. [ State of Maharashtra v. Super Max International (P) Ltd. , (2009) 9 SCC 772 : (2009) 3 SCC (Civ) 857] by three-Judge Bench of this Court. Therefore, looking to the fact that the decree of eviction passed by 10 (2006) 13 SCC 136 11 (2022) 8 SCC 527 13| SLP(C) 4049 of 2020 the trial court on 3-3-2016 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. 19. The basis of determination of the amount of mesne profits, in our view, 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.” (Emphasis supplied) 18. A perusal of the judgments extracted above as also other cases where Atma Ram Properties (supra) one common factor can be observed, i.e., the decree of eviction stands passed and the same having been stayed, gives rise to the question of payment of mesne profit. As observed above, the respondent contends that since, in the present case no decree of eviction is passed, and there is no stay awarded, the question of such payment does not arise. 19. While the above-stated position is generally accepted, it is also within the bounds of law, that a tenant who once 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. In this regard, we may refer to Indian Oil Corporation Ltd. v. Sudera Realty 12 Private Limited , wherein this Court in para 64 observed as under : “64. A tenant continuing in possession after the expiry of the lease may be treated as a tenant at sufferance, which status is a shade higher than that of a mere trespasser, as in the case of a tenant continuing after the expiry of the lease, his original entry was lawful. But a tenant at sufferance is not a tenant by holding over. While a 12 2022 SCC OnLine 1161 14| SLP(C) 4049 of 2020

(Emphasis supplied) 20. It is to be noted that the Court in Sudera Realty (supra) observed that mesne profits become payable on continuation of possession after ‘expiry’ of lease. In our considered view, the effect of the words ‘determination’, ‘expiry’, ‘forfeiture’ and ‘termination’ would, subject to the facts applicable, be similar, i.e., when any of these three words are applied to a lease, henceforth, the rights of the lessee/tenant stand extinguished or in certain cases metamorphosed into weaker rd iteration of their former selves. Illustratively, Burton’s Legal Thesaurus 3 Edn. suggests the following words as being similar to ‘expire’ - cease, come to an end; ‘determine’ is similar to - come to a conclusion, bring to an end; ‘forfeiture’ is similar to – deprivation/destruction of a right, divestiture of property; and ‘terminate’ is similar to – bring to an end, cease, conclude. Therefore, in any of the these situations, mesne profit would be payable. 21. Having considered the submissions made across the Bar, we note that the disputed nature of the lease deed, in other words, its continuation or forfeiture on account of non-payment is heavily contested and stemming therefrom, so is the nature of payment to be made. We also note that the location of demised premises is in the heart of Kolkata and if the submissions of the petitioner are to be believed, they have been deprived of rent for a considerable period of time. Taking a lock 15| SLP(C) 4049 of 2020 stock and barrel view of the present dispute, the averments and the documents placed before us, we may record a prima facie view, that the respondent-tenant has for the reasons yet undemonstrated, been delaying the payment of rent and/or other dues, payable to the petitioner-applicant landlord. This denial of monetary benefits accruing from the property, when viewed in terms of the unchallenged market report forming part of the record is undoubtedly substantial and as such, subject to just exceptions, we pass this order for deposit of the amount claimed by the petitioner-applicant, to ensure complete justice inter se the parties, After all, we cannot lose sight of the fact 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. The factors considered by us have been referred to in Martin and Harris (Supra). We are supported in our conclusion by the observations and guidelines issued by this Court in Mohammad Ahmed & Anr. v. Atma Ram Chauhan & 13 Ors. . We reproduce the ones relevant to the adjudication of the present dispute hereinbelow- “21. According to our considered view majority of these cases are filed because the landlords do not get reasonable rent akin to market rent, then on one ground or the other litigation is initiated… ( i ) The tenant must enhance the rent according to the terms of the agreement or at least by ten per cent, after every three years and enhanced rent should then be made payable to the landlord. If the rent is too low (in comparison to market rent), having been fixed 13 (2011) 7 SCC 755 16| SLP(C) 4049 of 2020

clear that directions made in the above-stated Interlocutory Applications herein are subject to the final outcome of the former. Keeping in view the location of the demised premises, the rent as agreed, the alleged non-payment of rent, the default in payment of interest, as alleged, and other such like factors we are inclined to accept the calculation of dues as made by the petitioner-applicant, submitted to this Court during hearing, as reproduced hereinabove. 23. Consequently, keeping in view the observations made in Super Max International (supra) and G.L. Vijain (supra), we direct the respondent to deposit the above-stated amount of Rs.5,15,05,512/- with the Registry of this Court within four weeks from today. An affidavit of compliance shall be filed in the Registry 17| SLP(C) 4049 of 2020 of this Court within a week thereafter. Failure to comply with the aforementioned shall entail all consequences within the law, including wilful disobedience of the order. The Registry is directed to place the amount received in a short-term, interest-bearing fixed deposit. 24. The Interlocutory Applications for directions seeking similar relief filed in SLP(C)Nos.4050 (I.A. No.120227/2020), 4051 (I.A. No.120235/2020), and 4052 (I.A. No.120248/2020) of 2020 shall stand disposed of in the same and similar terms as the I.A. No.120219/2020 filed in SLP(C)No.4049/2020, discussed above. 25. Let the Special Leave Petitions appear in the month of July, 2024. ………………………..J. (J.K. MAHESHWARI) ………………………..J. (SANJAY KAROL) New Delhi; May 17, 2024. 18| SLP(C) 4049 of 2020