Use and occupation charges require an evidentiary inquiry and cannot be fixed solely on precedent.

The petition was filed under Section 24(5) of the Himachal Pradesh Urban Rent Control Act, 1987, read with Section 115 of the Code of Civil Procedure, challenging the order dated 13 November 2024 passed by the District Judge, Shimla, exercising appellate powers under the Rent Act.

The Rent Controller had allowed the eviction petition under Section 14(3) of the Rent Act on 8 December 2023 and directed delivery of vacant possession within two months.

During the pending appeal, an application under Section 24(2) seeking stay of the eviction order was filed, and an application under Section 151 CPC was moved seeking use and occupation charges at the prevailing market rate from 8 December 2023.

The landlord claimed that comparable premises in the area commanded at least Rs. 100 per square foot and sought Rs. 1,86,500 as use and occupation charges.

The tenant disputed the claimed rate, asserting that the market rate was only Rs. 80–100 per square metre per month.

The Appellate Authority fixed the charges at Rs. 500 per square foot per month from 8 December 2023 until disposal of the appeal, without holding an inquiry or permitting the parties to produce supporting evidence.

Whether the Appellate Authority could determine use and occupation charges at a specific market rate without conducting an inquiry or allowing the parties to produce evidence regarding the prevailing rental value?

Whether the order fixing use and occupation charges at Rs. 500 per square foot per month was sustainable when neither party had placed material establishing the potential value of the demised premises?

The Court applied Section 24(5) of the Himachal Pradesh Urban Rent Control Act, 1987, read with Section 115 CPC, governing the High Court’s revisional jurisdiction.

It recognised the principle that when an eviction order is stayed or possession continues after the eviction order, the person remaining in possession may be required to compensate the landlord by paying reasonable use and occupation charges at the prevailing market rate.

The Court relied on M/s Bird Travels (P) Ltd. v. Amarjit Kaur, 2012 LawFinder (SC) 1249, which holds that determination of mesne profits requires evidence from both sides and an appropriate inquiry by the competent authority.

The Court also considered Section 151 CPC, under which the application for use and occupation charges had been filed.

Although the Court accepted the general rule that continued occupation after an eviction order can attract liability for use and occupation charges, it found that the rate could not be fixed mechanically or solely by relying on precedents concerning other premises.

The Appellate Authority had neither conducted an independent inquiry nor directed the Rent Controller to determine the prevailing market rate, and had fixed Rs. 500 per square foot per month without evidentiary material specific to the demised premises.

Applying Bird Travels, the Court held that the disputed rate required an opportunity to both parties to produce documents and other relevant material regarding the market value of the premises.

Since neither side had placed documents establishing the potential rental value, the impugned determination was unsustainable.

The application under Section 151 CPC was revived and remanded to the Appellate Authority, which was directed to decide it afresh after giving both parties an opportunity to produce relevant documents.

The process was directed to be completed within two months from receipt of the judgment, and the parties were directed to appear before the Appellate Authority on 11 September 2026 at 10:00 a.m.