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2007 DIGILAW 1440 (DEL)

ALLAHABAD BANK v. K. KISHORE (HUF)

2007-07-23

A.K.SIKRI, ARUNA SURESH

body2007
A. K. SIKRI, J. ( 1 ) M/s. K. Kishore (HUF) is the tenant in respect of Flat No. 29 (First floor), Regal Building, Connaught Place, New Delhi, measuring 2200 sq. yds. It, however, had the requisite permission from the landlord to sub-let these premises. M/s. Smarts Private Limited, likewise, is the tenant in the same Flat no. 29, Regal Building, First Floor, described as mezzanine and storage lofts. It also enjoys the right to sub-let the said premises. M/s. United Industrial bank Limited (hereinafter referred to as the 'uib') took on rent the aforesaid premises, by way of sub-letting, from both the tenants. In the first case, lease was executed for a period of 10 years and in the second case, licence agreement was executed for the same period, which was co-terminus with the first lease. UIB was subsequently taken over by the Allahabad Bank for which necessary notification was issued by the Government of India, Ministry of finance (Department of Economic Affairs ). Prior to this takeover, notification issuing moratorium of UIB was passed. This resulted in non-payment of rents to both M/s. K. Kishore (HUF) and M/s. Smarts Private Limited. They served notice of termination of lease/licence agareement and filed suits for recovery of possession, arrears of rent and damages for alleged wrongful use and occupation of the premises by Allahabad Bank. Suit of M/s. K. Kishore, which was filed on the original side of this Court, has been decreed vide judgment and decree dated 15. 12. 2005. Suit filed by M/s. Smarts Private Limited, which was dealt with by smt. Sunita Gupta, Additional District Judge, Delhi, has also been decreed vide judgment and decree dated 5. 11. 2005. Allahabad Bank has filed appeal against both the judgments. M/s. K. Kishore and Company has also filed appeals against the judgment rendered by the learned Single Judge of this Court challenging the quantum of mesne profits awarded and the period for which it is awarded. This is how all these three appeals were taken up together for argument and we propose to dispose of these appeals by this common judgment. ( 2 ) FOR the sake of convenience, facts as appear on the record of RFA (OS) no. 15/2006 are stated hereinafter. This is how all these three appeals were taken up together for argument and we propose to dispose of these appeals by this common judgment. ( 2 ) FOR the sake of convenience, facts as appear on the record of RFA (OS) no. 15/2006 are stated hereinafter. RFA (OS) No. 15/2006 ( 3 ) AS pointed out above, M/s. K. Kishore (HUF) (hereinafter referred to as the 'respondent') entered into sub-lease for a period of 10 years with M/s. UIB. This sub-lease dated 18. 5. 1987 was duly registered with the Sub-Registrar. Lease deedcommenced with effect from 1. 2. 1987 and was to expire on 31. 1. 1997. It was agreed that rent would be paid in the following manner:- 1st 3 years from 1. 2. 98 to 31. 1. 90 Rs. 10,500/- per month next 3 years from 1. 2. 90 to 31. 1. 93 Rs. 16,000/- per month next 4 years from 1. 2. 93 to 31. 1. 97 Rs. 22,500/- per month ( 4 ) UIB gave surety of Rs. 1 lakh, free of interest, which was to be refuneded by the respondent on satisfactory termination of sub-lease agreement, subject to deduction of any amounts due from the respondent. ( 5 ) UIB paid rent up to 30. 6. 1989 and thereafter started committing defaults. When enquired, it informed the respondent herein that the notification dated 10. 6. 1989 was issued by the Government of India, Ministry of finance (Department of Economic Affairs), placing UIB under a moratorium because of which the UIB was in a hapless situation, as it was not permitted to expend any amount. The respondent took up the position that the said moratorium had placed no restriction on the payment of rent but UIB did not make any payment. The respondent even served notice dated 29. 9. 1989 upon the UIB demanding rent and complaining that its cheques were not being honoured. Thereafter, notification dated 30. 10. 1989 was issued by the Government of India, Ministry of finance (Department of Economic Affairs) in exercise of powers contained in sub- section (7) of Section 45 of the Banking Regulation Act, 1949, sanctioning the scheme of Amalgamation of UIB with Allahabad Bank (hereinafter referred to as the 'appellant bank' ). Thereafter, notification dated 30. 10. 1989 was issued by the Government of India, Ministry of finance (Department of Economic Affairs) in exercise of powers contained in sub- section (7) of Section 45 of the Banking Regulation Act, 1949, sanctioning the scheme of Amalgamation of UIB with Allahabad Bank (hereinafter referred to as the 'appellant bank' ). ( 6 ) SECTION 45 empowers the Reserve Bank of India to apply to Central government for suspension of business of a banking company and to prepare scheme of reconstitution or amalgamation. Under sub-section (4), Reserve Bank of India can issue order of moratorium. During the period of moratorium, Reserve Bank may prepare a scheme, inter alia, for amalgamation of the said bank with any other bank. Sub-section (5) stipulates the provisions which such a scheme can contain. Sub-section (7) gives power to the Central Government to sanction the scheme with or without modification. Sub-section (8) provides that after the scheme is sanctioned and notified, the scheme or such provision shall be binding on the banking company (. e. UIB in the instant case) and the transferee bank (. e. the appellant bank in the instant case ). It is also binding on all the members, depositors and other creditors and employees of both transferor and transferee as well as "on any other person having any right or liability in relation to any of those companies or the transferee bank. " This clearly demonstrates the involuntary and binding nature of the Scheme. Sub-section (9), amongst other, provides that the properties and assets of the transferor banking company would stand transferred to and vest in the transferee bank. The appellant accordingly gets rights under the sub-lease by virtue of the aforesaid statutory provisions. ( 7 ) UIB, thus, stood amalgamated with the appellant bank with effect from 31. 10. 1989, which was the date prescribed in the said notification, as a consequence whereof entire business assets, properties etc. of the UIB were taken over and vested in the appellant bank. ( 7 ) UIB, thus, stood amalgamated with the appellant bank with effect from 31. 10. 1989, which was the date prescribed in the said notification, as a consequence whereof entire business assets, properties etc. of the UIB were taken over and vested in the appellant bank. Relevant portion of this notification, prescribing this authoritative command, reads thus: " (2) As from the date which the Central Government may specify for this purpose under sub section (7) of Section 45 of the said Act (hereinafter referred to as the prescribed date) all rights, powers, claims, demands, interests, authorities, privileges, benefits, assets and properties of the transferor bank, movable and immovable, including premises subject to all incidents of tenure and to the rents and other sums of money and covenants reserved by or contained in the lease or agreements under which they are held, all office furniture, loose equipment, plant apparatus and appliances, books, papers, rocks of stationary, other stocks and stores, all investments in stocks, shares and securities, all bills receivable in hand and in transit, all cash in hand and on current or deposit account (including money at all or short notice) with banks bullion, all book debts, mortgage debts and other debts with the benefit of securities, or any guarantee therefor, all other if any, property rights and assets benefit of all guarantees in connection with the business of the transferor bank shall, subject to the other provisions of this scheme, stand transferred to and become the properties and assets of the transferee bank, and as from the prescribed date all the liabilities, duties and obligations of the transferor bank shall be and shall become the liabilities, duties and obligations of the transferee bank to the extent and in the matter provided hereinafter. " ( 8 ) PURSUANT to this takeover, the appellant bank took possession of all the assets, movable and immovable, of UIB, including the suit property. According to the respondent, this act on the part of the UIB in giving possession of the suit premises to the appellant bank amounted to assigning and/or parting with possession of the property which UIB was not entitled to. In fact, even before such notification could be issued, as this takeover was imminent and almost certainty after the issuing of moratorium for which the scheme was also under preparation. In fact, even before such notification could be issued, as this takeover was imminent and almost certainty after the issuing of moratorium for which the scheme was also under preparation. The respondent filed the suit for injunction seeking restraint order against UIB from handing over the possession of the suit property to the appellant bank. In this suit, the learned Senior Sub-Judge, delhi, passed orders dated 25. 10. 1989 restraining UIB from handing over possession of the premises to anybody. However, after the notification dated 30. 10. 1989, possession of the premises was taken over by the appellant bank. The respondent, in these circumstances, got served through its counsel, notice dated 301. 1990 upon the appellant bank as the appellant bank had started depositing rent in the account of the respondent maintained with it. In this notice, the respondent took the position that such entries made in the account of the respondent were unauthorised. Thereafter, another notice dated 7. 9. 1991 was served by the respondent upon the appellant bank reiterating that the appellant bank should not make any such arbitrary and unauthorised entires in its accounts. Ultimately, another notice dated 20. 12. 1991 was served upon UIB as well as the appellant bank alleging therein that UIB had committed serious defaults in payment of rent and also that it had parted with the possession of the suit property by handing over the same to the appellant and due to these purported violations, the respondent was determining the deed of sub-lease. The uib and the appellant bank were called upon to surrender and hand over the possession of the suit property by 1. 2. 1992 and latest by 16. 2. 1992, if the tenancy month was so construed. Payment of Rs. 17,29,500/- towards arrears of rent/damages of the entire unexpired period as on 1. 7. 1989 along with interest at the rate of 18% per annum was also demanded. From 1. 7. 1989 damages/mesne profits for use and occupation of the suit premises were demanded at the rate of rs. 2,000/- per day till the restoration of physical and vacant possession of the suit premises to the respondent. Thereafter, the respondent filed aforesaid CS (OS) No. 1605/1992. From 1. 7. 1989 damages/mesne profits for use and occupation of the suit premises were demanded at the rate of rs. 2,000/- per day till the restoration of physical and vacant possession of the suit premises to the respondent. Thereafter, the respondent filed aforesaid CS (OS) No. 1605/1992. ( 9 ) THE appellant bank filed the written statement, inter alia, stating that there was no default in making the payment of rent; rent was being credited to the account of the respondent as and when it had fallen due; for some period rent could not be paid because of the moratorium imposed upon UIB; the appellant bank had right to continue with the sub-lease, which was valid for a period of 10 years, being successor-in-interest, by virtue of notification dated 30. 10. 1989. The appellant bank also raised counter-claim in the sum of rs. 16,826/- alleging that this amount was spent by the appellant bank on the repairs of the suit premises. Following issues were framed on the basis of pleadings: "1. Whether the plaintiff proves that on account of the amalgamation of united Industrial bank with the Allahabad Bank, the defendant,. e. Allahabad bank is in unauthorised occupation" 2. Whether the plaintiff proves that the tenancy of the defendant has been legally terminated" 3. Whether the plaintiff is entitled to mesne profits" If yes, from which date and at what rate" 4. Whether the defendant, by way of counter-claim, is entitled to rs. 16,826. 85, as averred in written statement" 5. To what relief, if any, the plaintiff/defendant is entitled to" 6. What order and decree"" ( 10 ) DURING the pendency of the said suit, on an application preferred by the respondent under Order XII Rule 6 CPC, a decree for recovery of possession was passed vide order dated 28. 1. 1998. It was held therein that the appellant was a lawful tenant/occupant of the premises till 1. 2. 1997 when the lease came to an end by efflux of time. Issue Nos. 1 and 2 were disposed of by the aforesaid order dated 28. 1. 1998. However, on the respondent filing appeal against this order, the Division Bench reversed the findings on issue Nos. 1 and 2, vide its judgment dated 27. 5. 1999 holding that there was no occasion for the learned Single Judge to decide issue Nos. 1 and 2. 1 and 2 were disposed of by the aforesaid order dated 28. 1. 1998. However, on the respondent filing appeal against this order, the Division Bench reversed the findings on issue Nos. 1 and 2, vide its judgment dated 27. 5. 1999 holding that there was no occasion for the learned Single Judge to decide issue Nos. 1 and 2. The implication of this order was to keep issue Nos. 1 and 2 alive to be determined at the time of disposal of the suit along with other issues. Parties led their evidence thereafter. However, pursuant to the decree of possession dt. 28. 1. 1998 the appellant bank handed over the possession to the respondent in March, 1999 (. e. even before the appeal was decided by the Division Bench on 27. 5. 1999 ). The only question, therefore, which remained to be decided related to the payment of arrears of rent and mesne profits. ( 11 ) VIDE the impugned judgment, the learned Single Judge has decided issue no. 1 in favour of the appellant bank holding that its possession was not unauthorised as it could not be treated that the UIB had sub-let or parted with possession of the suit premises since the suit premises came to be possessed by the appellant bank as a result of amalgamation orders vide notification dated 30. 10. 1989. The learned Single Judge, however, held that tenancy was rightly terminated vide notice dated 20. 12. 1991 on the ground that there was default on the part of the defendants in not paying the rent regularly. The effect of this decision on issue No. 2 was that, as per the learned Single Judge, the rent was payable till 16. 12. 1992 at agreed rate and only from 17. 2. 1992, the respondent was entitled to damages/mesne profits. The learned Single Judge thereafter proceeded to decide the quantum of such damages and concluded, while deciding issue No. 3, that the damages were payable at the rate of 30 per sq. ft. ,. e. Rs. 66,000/- per month. Decree in the sum of Rs. 60,42,500/- towards rent and damages is accordingly passed for the period from 1. 11. 1989 to 31. 3. 1999, break- up whereof is as under:- " (i) Rent from 1st November, 1989 to 31st January, 1990 at the agreed rate of rent of Rs. 10,500/- per month = Rs. 31,500/ -. 66,000/- per month. Decree in the sum of Rs. 60,42,500/- towards rent and damages is accordingly passed for the period from 1. 11. 1989 to 31. 3. 1999, break- up whereof is as under:- " (i) Rent from 1st November, 1989 to 31st January, 1990 at the agreed rate of rent of Rs. 10,500/- per month = Rs. 31,500/ -. (ii) Rent from 1st February, 1990 to 16th February, 1992 at the agreed rate of rent of Rs. 16,000/- per month = Rs. 3,68,000/ -. (iii) Damages from 17th February, 1992 to 31st March, 1999 at the rate of rs. 30/- per square feet,. e. Rs. 66,000/- per month = Rs. 56,43,000/ -. " ( 12 ) THE appellant bank has been permitted to adjust the amounts already paid. ( 13 ) WE may mention here that issue No. 4 was decided against the appellant bank but in the present appeal findings on that issue are not challenged. ( 14 ) WE may now spell out the scope of the appeal filed by the appellant bank. The appellant bank has challenged the finding of the learned Single Judge on issue no. 2 holding that the tenancy was rightly terminated vide notice dated 20. 12. 1991 (Ex. PW 1/28 ). The submission, in nutshell, is that the period of sub-lease was 10 years, which was to expire only on 31. 1. 1997 and the respondent had no right to terminate the said sub-lease prior to that even if there was no default on the part of UIB and/or the appellant bank to pay the rent. Therefore, according to the appellant bank, there could not have been any damages awarded for the period up to 31. 1. 1997 and the respondent was entitled to damages only with effect from 1. 2. 1997. The appellant has also challenged the quantum of mesne profits fixed by the learned trial court on the ground that there was hardly any evidence produced by the respondent to justify award of damages at the aforesaid rate. Submission, in this behalf, was that the learned single Judge rightly discredited the evidence of the respondent bank, but at the same time awarded damages at the said rate on the basis of statement of the appellant's witness, which was not appreciated in the right perspective. ( 15 ) WE shall take note of these arguments in detail at the appropriate stage. ( 15 ) WE shall take note of these arguments in detail at the appropriate stage. Before we do that, it would also be necessary to understand the scope of appeal filed by the respondent,. e. RFA (OS) No. 50/2006. In this appeal filed by M/s. K. Kishore (HUF), findings on issue No. 1 are challenged reiterating that amalgamation of UIB with the appellant bank did not give any right to the appellant bank to take over the suit premises and, therefore, handing over of the suit premises by the UIB to the appellant bank amounted to unauthorised act of parting with possession without the consent of the respondent and, therefore, the respondent is entitled to damages with effect from 1. 11. 1989 and not 17. 2. 1992, as awarded by the learned Single Judge. The second grievance is about the rate. According tot he respondent, the award of mesne profits at rs. 30/- per sq. ft. is on much lower side. Relying upon the same testimony of the appellant bank's witness, argument is that it was not properly appreciated by the learned Single Judge and the damages could be awarded at much higher rate on the basis of same testimony. ( 16 ) THE scope of two appeals, as delineated above, would make it clear that in both the appeals the two aspects, which are challenged by both the parties, relate to period for which mesne profits are to be awarded and the rate at which these are to be awarded as both the parties are aggrieved by the findings of the learned Single Judge on these aspects. Therefore, we proceed to discuss these two issues, one after the other. A) Period for which mesne profits/damages are payable:- ( 17 ) SUBMISSION of Mr. Dhruv Mehta, the learned counsel for the appellant, was that the sub-lease was for a period of 10 years. It was categorically mentioned in clause (7) of the lease deed that on premature vacation of the premises by the sub-tenant, sub-tenant was under the obligation to pay the rent for the entire unexpired period of the sub-lease. This sub-lease did not contain any clause regarding termination of sub-tenancy on an earlier date for any reason whatsoever, including non-payment of the rent. This sub-lease did not contain any clause regarding termination of sub-tenancy on an earlier date for any reason whatsoever, including non-payment of the rent. In the absence of forfeiture clause, the respondent could not serve notice of termination as section 111 of the Transfer of Property Act was not attracted in such a situation. Learned counsel relied upon two judgments of the Apex Court in support of this plea, namely, (i) Modern Hotel, Gudur Vs. K. Radhakrishaiah and others, (1989) 2 SCC 686 and Raghuram Rao and Others Vs. Eric P. Mathias and others, (2002) 2 SCC 624 . ( 18 ) LEARNED counsel for the respondent, on the other hand, submitted that admittedly for the period from 1989 to 1993 no rent was paid and, therefore, the respondent could terminate the sub-lease on this ground and the tenancy was rightly terminated vide notice Ex. PW 1/23. He submitted that Section 111 (g) could not be read in the manner the appellant bank wanted, as otherwise any person after taking the premises on rent could stop making payment of rent and still enjoy the tenancy for the contractual period mentioned in the lease. He, therefore, submitted that relevant provisions, which were to be taken note of conjointly, were Section 108 (o) and Section 111 (h) along with Section 111 (g ). ( 19 ) HIS further submission was that in any case, Section 111 (g) was attracted also on the ground that the lessee UIB has renounced the character as lessee as a result of its merger with the appellant bank inasmuch as it was no more in existence. With the loss of this character, tenancy was terminable. Clause (8) of the sub-lease categorically provided that UIB could not assign or part with possession and, therefore, mesne profits were payable with effect from 1. 11. 1989. He also referred to the judgment of the Supreme Court in the case m/s. General Radio and Applicances Co. Ltd. Vs. M. A. Khader (dead) by L. Rs. , AIR 1986 SC 1218 to butress his submission that merely because under the Scheme of amalgamation, the company, which is lessee, gets amalgamated with another company, the said transferor company has no right to inherit the tenancy and it would amount to parting with possession. Ltd. Vs. M. A. Khader (dead) by L. Rs. , AIR 1986 SC 1218 to butress his submission that merely because under the Scheme of amalgamation, the company, which is lessee, gets amalgamated with another company, the said transferor company has no right to inherit the tenancy and it would amount to parting with possession. ( 20 ) WE may first deal with the issue of amalgamation of UIB with the appellant bank and its effect in so far as sub-lease of suit premises is concerned. We have already reproduced the relevant portion of the Notification dated 30. 10. 1989. This notification is issued by the Government of India in exercise of its powers under sub-section (7) of Section 45 of the Banking regulation Act whereby UIB was amalgamated with the appellant bank. The appellant bank is a statutory bank, which was created on the passing of the banking Companies (Acquisition and Transfer of Undertaking) Act, popularly known as the Banking Nationalisation Act. UIB, on the other hand, prior to its merger with the appellant bank, was a private sector bank. It was a company incorporated under the Indian Companies Act, which was doing banking business after obtaining licence from the Reserve Bank of India and was governed by the provisions of the Banking Regulation Act. The amalgamation of UIB with the appellant bank was not a voluntary act either on the part of the UIB or the appellant bank. It was a decision taken by the Government of India. The merger is the eventual upshot and effect of the said notification which is statutory in nature. In such a situation, the transferee bank, namely, the appellant bank in this case, would be a successor-in-interest and would step into the shoes of the uib after taking over all its assets and liabilities. This principle would extend to even the tenancies or the other agreements which UIB signed with third parties. It would be deemed, after the appointed date and with the amalgamation, as if the appellant bank is substituted in all such documents wherever name of the UIB appeared. It would percolate to the document in question, namely, sub-lease, deeming as if the sub-lease was entered into between the respondent and the appellant bank from a date the appellant took over the UIB. It would percolate to the document in question, namely, sub-lease, deeming as if the sub-lease was entered into between the respondent and the appellant bank from a date the appellant took over the UIB. This very aspect has been dealt with by a learned Single Judge of this Court in the case of Mrs. Asha Rohtagi and Ors. Vs. Erestwhile New Bank of india through General Manager PNB 119 (2005) DLT 538. That was a case where by issuing similar nature of notification, New Bank of India was amalgamated with the Punjab National Bank. The appellant had taken the same contention, namely, taking over the tenanted premises by the successor bank amounted to sub- letting/parting with possession by the predecessor bank. Repelling this contention, it was observed as under:- "9. In the present case the tenancy rights have been conferred on the PNB by statute namely clause 4 (2) of the notification dated 4. 9. 1993 promulgated by central Government under section 9 of the Banking Companies (Acquisition and transfer of Undertaking) Act 1980 which scheme is legislative in character. It does not amount to merger of two companies under the provisions of Companies act. Therefore the ratio of M/s Parasram Harnand Rao Vs. M/s. Shanti Prasad narinder Kumar Jain, AIR 1980 SC 1655 ; M/s General Radio and Appliances Co. Ltd. and Ors. and Cox and Kings Ltd. and Anr. v. Chander Malhotra (Smt.) will not apply to the facts of the present case. One more decision which must be taken note of is a three judges bench decision in the case of G. Sridharamurti v. Hindustan Petroleum Corporatuon Ltd. and Anr. '` (1995) 6 SCC 605 . The facts of the case were that an open space, was in the possession of Esso company pursuant to a lease dated 17. 7. 1969 granted by the appellant. Esso company was merged into respondent corporation on 14. 3. 197. The appellant filed eviction petition under section 21 (1) (f) of the Karnataka Rent Control on the ground of sub- letting, assignment parting with possession. 7. 1969 granted by the appellant. Esso company was merged into respondent corporation on 14. 3. 197. The appellant filed eviction petition under section 21 (1) (f) of the Karnataka Rent Control on the ground of sub- letting, assignment parting with possession. The courts below dismissed the application on the ground that the Esso company had not sub-set the demised premises but by virtue of statutory provisions under the Esso Act, the respondent-corporation stood transposed as a tenant which is an involuntary act pursuant to section 7 of the Act and notwithstanding the specific embargo created under Section 21 (1) (f) of the Act, it cannot be construed to be a case of sub-letting. The High Court also reached the same conclusion. In appeal supreme Court upheld the order of the High Court and took note of section 5 (1) of the Esso Act and observed that pre-existing tenancy rights held by Esso company with the appellant initially stood transferred and vested in the Central government, and thereafter, by operation of section 7 of the Esso Act; the said rights in turn stood transposed and vested in the government company as if the government company initially became the tenant of the appellant- landlord. On the Esso Act coming into force, by operation of sections 5 and 7 of that Act, the respondent corporation became statutory tenant and thereby it cannot be construed to be an assignment of tenancy rights, which the appellant landlord had entered into with the Esso company. The ratio of Parasram Harnand Rao (supra) was distinguished with the observation that in that case the Official liquidator had sold the tenancy rights in favour of the respondents and though the same was made in favour of the respondent through court, it amounted to transfer of an interest by the tenant. 10. It will thus be seen that consistent view of the Supreme court has been that take over of a company by the Central Government under a statute stands on a different footing then merger of two companies under the provisions of companies act. Vesting of tenancy rights in the Central Government or a Government company by virtue of the provisions of the statute was upheld by the apex court in the case of Hindustan Petroleum Corporation Ltd. and Anr. v. Shyam Co-operative housing Society and Ors. Vesting of tenancy rights in the Central Government or a Government company by virtue of the provisions of the statute was upheld by the apex court in the case of Hindustan Petroleum Corporation Ltd. and Anr. v. Shyam Co-operative housing Society and Ors. , (1988) 4 SCC 747 and this decision was cited with approval in the case of Singer India Ltd. v. Chander Mohan Chadha and Ors. , 113 (2004) DLT 80 (SC ). Whereas in cases of later category. e transfer of tenancy rights under an scheme of amalgamation under provisions of company Act has been consistently held to be sub letting, assignment or parting with possession, in cases falling in the former category viz. where tenancy rights of one company are taken over by the Government and are conferred on some other government company under a statute have never been held to tantamount to sub letting, assignment or parting with possession. The case in hand falls in this category. As already noticed leasehold rights on PNB have been conferred by clause 4 (2) of the notification dated 4. 9. 93 issued under section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 which scheme is legislative in character. It cannot fall in the category of any voluntary or involuntary transfer of interest by the tenant. Therefore, it does not amount to sub-letting assignment or parting with possession of tenancy rights by the tenant. The impugned order passed by the learned Tribunal therefore does not call for any interference. " ( 21 ) THE SLP against this judgment was also dismissed by the Supreme Court. This judgment even answers the argument of the respondent based on M/s. General radio and Applicances Co. Ltd. Vs. M. A. Khader (supra ). That was a case where scheme of amalgamation was sanctioned by the High Court under Section 391 and 394 of the Companies Act. Such a scheme is voluntary in nature. e. it is the consequence of the will of the shareholders, creditors etc. inasmuch as more than 75% shareholders and creditors in value are required to give their consent before the scheme can be filed in the High Court for sanction. In contradistinction, by notification issued under Section 45 of the Banking regulation Act, scheme is foisted upon the shareholders, creditors and other stakeholders. inasmuch as more than 75% shareholders and creditors in value are required to give their consent before the scheme can be filed in the High Court for sanction. In contradistinction, by notification issued under Section 45 of the Banking regulation Act, scheme is foisted upon the shareholders, creditors and other stakeholders. In a case like this, the respondent would not be entitled to say that there is a breach of clause (8) of the sub-lease on the part of UIB, which stipulates as under:- "8. The Sub-tenant shall not assign or part with the possession of the flat or any part thereof of any person or any basis whatsoever and will use the same entirely for its own banking business. " ( 22 ) IT is not the voluntary act of the UIB parting with possession of the suit premises but a consequence of statutory step taken by a third party, namely, the Central Government in the instant case making appellant bank as successor-in-interest. Moreover, it cannot be denied that the premises continued to be used for banking business by the appellant Bank, including the one which was hitherto carried out by the UIB. ( 23 ) WE are, therefore, of the opinion that the learned Single Judge was right in deciding issue No. 1 and holding that the appellant bank was not in unauthorised occupation when it got possession of the suit property as a result of the amalgamation of UIB with the appellant bank. ( 24 ) NEXT question is as to whether the sub-lease was indeterminable for the period of 10 years,. e. during the currency of the said sub-lease. Learned counsel for the appellant had referred to clause (7)of the sub-lease as per which, firm period of 10 years is prescribed. Clause (7) is in the following terms:- "7. That if during the continuance of the Sub-lease, the Sub-tenant desires to vacate the demised premises, the Sub-tenant will be liable to pay the rent for the entire unexpired period of the sub-lease. " ( 25 ) THE submission was that even in the case of early exit on the part of uib, it was under obligation to pay the rent for the entire unexpired period of sub-lease,. e. till 31. 1. 1997. " ( 25 ) THE submission was that even in the case of early exit on the part of uib, it was under obligation to pay the rent for the entire unexpired period of sub-lease,. e. till 31. 1. 1997. He further submitted that there was no 'forfeiture clause' and sub-lease did not contain any stipulation giving right to the respondent to determine the lease, in case the rent was not paid. Therefore, for the non-payment of rent, sub-lease could not be determined and the only right of the respondent was to recover the rent as prescribed in the said deed as per which, rent was payable at enhanced rate on the expiry of three years and six years respectively. ( 26 ) IT is the common case that the lease deed does not contain any covenant giving right to the respondent to terminate the sub-lease in case of non-payment of rent by the appellant. Therefore, in the absence of a contractual right, we have to see whether the statute, namely, Transfer of property Act gives any such right to the respondent. In the Modern Hotel Vs. K. Radhakrishnaiah (supra), the Supreme Court was confronted with exactly the same situation and the lease in that case was entered into in the year 1969 and was for a term of 30 years. One of the arguments was that the lease did not have any forfeiture clause so as to bring the matter within the ambit of Section 111 (g) of the Transfer of Property Act and, therefore, eviction could not be sought before the expiry of 30 years period even when there was default in the matter of payment of rent. Then, the Court answered the same in the affirmative:- "the lease being for a term of 30 years is to expire in September 1999. As we have already said, the lease did not stipulate a forfeiture clause and in the absence of a forfeiture clause in the lease leading to termination by forfeiture, the contractual tenancy was subsisting under the provisions of the transfer of Property Act and there could not be any eviction from such a tenancy. " ( 27 ) AGAIN, in the case of Raghuram Rao Vs. Eric P. Mathias (supra), the supreme Court re-stated the law in the following terms:- "20. " ( 27 ) AGAIN, in the case of Raghuram Rao Vs. Eric P. Mathias (supra), the supreme Court re-stated the law in the following terms:- "20. The finding of the High Court on the question of partial alienation, in our view, is without considering the facts as discussed in detail by the trial court as well as by the first appellate court. Both the courts on facts held that there was partial alienation of the leasehold property. It appears that the High Court took into consideration the alienations because of the partition suits filed between the family members of the deceased lessee, but forgot the fact that the lessor in the suit itself had stated that as the said alienations were between family members, forfeiture clause was not invoked at that time. Same thing is stated before this court in written submission filed by the learned counsel for the appellant-defendants. The first appellate court has specifically arrived at the conclusion that out of the leasehold property which was 40 cents what has been alienated in both the suits was only to the extent of 29 cents and the remaining 11 cents acquired in the partition by sanjiva Sapalya was not the subject-matter of alienation. It appears that the high Court has overlooked this aspect and decided the entire matter without application of mind to the facts and contentions of the parties. " ( 28 ) SECTION 111 of the Transfer of Property Act enumerates eight different ways in which a lease is determined. None of these eight eventualities mention non-payment of rent. Clauses (g) and (h) of Section 111 only need to be reproduced as concededly we are not concerned with any other ways mentioned in the said provision in which a lease is determined. None of these eight eventualities mention non-payment of rent. Clauses (g) and (h) of Section 111 only need to be reproduced as concededly we are not concerned with any other ways mentioned in the said provision in which a lease is determined. We reproduce clauses (g) and (h):- " (g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease, (h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other. " ( 29 ) SECTION (g) is in three parts all of which are conditioned by "forfeiture",. e. under three circumstances stipulated therein it will be treated as forfeiture of lease. First contingency is the one when lessee breaks an express condition which provides that on breach thereof the lessor may re- enter. In the instant case, as already taken note of above, no doubt the UIB and/or the appellant bank defaulted in making payment of rent and to that extent express condition for payment of rent regularly was violated. However, sub- lease deed did not provide that on breaking this condition the lessor would have right to re-enter. The aforesaid two cases of the Supreme Court would, therefore, be applicable in so far as first contingency is concerned. ( 30 ) LEARNED counsel for the respondent tried to bring the case in the second eventuality provided in clause (g ). His submission was that the lessee,. e. UIB had renounced its character by setting up a title in a third person,. e. it stood amalgamated with the appellant bank which amounted to renouncing its character and transferring the title in favour of the appellant bank and, therefore, lease stood determined thereby. His submission was that the lessee,. e. UIB had renounced its character by setting up a title in a third person,. e. it stood amalgamated with the appellant bank which amounted to renouncing its character and transferring the title in favour of the appellant bank and, therefore, lease stood determined thereby. This plea cannot be accepted when the amalgamation is as the result of exercise of statutory power of the government in which the lessee/uib had hardly any say. The position on this aspect as explained above would equally meet this argument of the learned counsel for the respondent as well. ( 31 ) WE are, therefore, of the opinion that on the ground of non-payment of rent in the absence of forfeiture clause in the contract,. e. sub-lease, the tenancy could not be determined. The findings of the learned Single Judge on issue No. 2 are, therefore, erroneous and are hereby reversed. We return the following findings on this issue; the sub-lease was not validly determined/terminated either vide Ex. PW 1/23 or Ex. PW 1/28. The appellant bank had right to continue to occupy the suit premises till 31. 1. 1997 as per the sub-lease deed. Therefore, the appellant bank became unauthorised occupant of the demised premises only with effect from 1. 2. 1997. The respondent, therefore, shall be entitled to damages/mesne profits for the period from 1. 2. 1997 to 31. 3. 1999. Till 31. 1. 1997 the liability of the appellant bank shall be to pay rent at contractual rate only, as provided in the sub-lease deed. B) Re. Rate of mesne profits:- ( 32 ) BEFORE coming to the rival arguments, we may reproduce the operative portion of the impugned judgment to find out the basis on which rate of Rs. 30/- per sq. ft. has been fixed by the learned Single Judge. The relevant extract containing discussion on this aspect is as follows:- "after examining the statements of the witnesses examined by the plaintiff as well as the defendant, this Court finds that there is enormous difference between the rates of rent as deposed to by the plaintiff's witnesses and the defendant's witness DW-1. Documentary evidence has been produced to establish the rate of rent of the similarly situated properties in the area but those properties are new with many facilities and in better parts of New Delh. Documentary evidence has been produced to establish the rate of rent of the similarly situated properties in the area but those properties are new with many facilities and in better parts of New Delh. The burden of proving the rate of rent was upon the plaintiff. The witnesses produced by the plaintiff have come out with rates which appear to be highly inflated. Rent deeds of other properties in the area have been produced on record but these do not establish as to what were the rates of properties similar to suit property between 1992 and 1999. The plaintiff's property was old and dilapidated and as such not at all comparable to new multi-storeyed building at Barakhamba Road and around which offered extra facilities to occupants. In the absence of satisfactory evidence to prove year-wise market rate of rent of similar properties, this Court can fall back upon the statement of DW-1 and hold that at least Rs. 30/- per square feet was the rate of rent for the similarly situated properties in the area from the year 1992 to the year 1999. The suit premises were handed back by the defendant to the plaintiff under the orders of this Court in 1999. This Court, therefore, can safely hold that the suit premises could be let out by the plaintiff at the rate of Rs. 30/- per square feet per month from the year 1992 itself if the defendant had vacated the premises after the termination of the tenancy on account of the default in payment of rent. The plaintiff is, therefore, held entitled to damages at the rate of Rs. 30/- per square feet per month from 17th February, 1992 to 31st march, 1999. The area of the suit premises was 2200 square feet which makes the plaintiff entitled to damages at the rate of Rs. 66,000/- per month. " ( 33 ) IT is clear that the evidence led by the respondent herein was largely discarded. Learned Single Judge relied upon the statement of the appellant bank's witness, namely, DW-1 on the basis of which it has been held that "at least" Rs. 30/- per sq. ft. can be fixed as the rent for similarly situated properties. Even before us entire thrust of counsel for both the parties was upon the statement of DW-1 in support of their rival contentions. 30/- per sq. ft. can be fixed as the rent for similarly situated properties. Even before us entire thrust of counsel for both the parties was upon the statement of DW-1 in support of their rival contentions. Interestingly, on the basis of this very statement whereas the appellant contends that rate should have been still lower than Rs. 30/- per sq. ft. per month, the respondent pleads for much higher rate. We may, therefore, set out the portion of the said statement of DW-1 on which both are placing their reliance. Significantly, this portion of the statement occurs in examination- in-chief of the witness and, therefore, the appellant bank is bound by the same. "on account of merger/amalgamation of United Industrial Bank with Allahabad bank, all the assets and liabilities are that of Allahabad Bank. The prevalent market rent in the vicinity of the premises in question is about Rs. 40/- to rs. 60/-per sq. ft. The same is the rate of rent in the Regal Building, where our branch is located. The State Bank of Patiala has taken a portion in the same building at a rent of Rs. 50/- per sq. ft. and is just adjacent to our branch. Allahabad Bank, main Branch, Zonal Office at Parliament Street has also let out some portions in the same building to different tenants at the rate of rs. 30/- to Rs. 50/- per sq. ft. Some of those tenants as I remember are M/s. Ray and Ray, M/s. Ogilvy, Benson and Mathur Pvt. Ltd. , B. S. T. etc. We also have our branch in the Madras Hotel Building at Connaught Place which is nearby to the premises in question at the rate of Rs. 25/- to Rs. 30/- per sq. ft. " ( 34 ) THE said statement was made on 15. 7. 1997. The main argument of the learned counsel for the appellant was that the witness had stated about the prevalent market rate which statement should be attributed as on the date it was made,. e. in July 1997 and on this basis mesne profits could not be fixed for the anterior period,. e. from July 1992. This argument need not even be considered now as we have taken the view that mesne profits are payable only from 1. 2. 1997. It was not in dispute that for this period the statement in question would become relevant. e. from July 1992. This argument need not even be considered now as we have taken the view that mesne profits are payable only from 1. 2. 1997. It was not in dispute that for this period the statement in question would become relevant. ( 35 ) IN the aforesaid statement, the witness has categorically mentioned that the prevalent market rate in the vicinity is Rs. 40/- to Rs. 60/- per sq. ft. and has specifically said that "the same is the rate of rent in Regal Building where our Branch is located. The State Bank of Patiala has taken a portion in the same building at a rent of Rs. 50/- per sq. ft. and is just adjacent to our branch. " ( 36 ) IT is clear from the above that even as per the bank's own case, the rentals for the relevant period were between Rs. 40/- to Rs. 60/- per sq. ft. Further, the State Bank of Patiala had taken the premises in the same building, adjacent to the suit premises at Rs. 50/- per sq. ft. Therefore, the respondent would be entitled to Rs. 50/- per sq. ft. as damages/mesne profits for the period in question even as per the bank's own case. Learned counsel for the respondent had however drawn our attention to the cross-examination of this witness wherein the witness admitted that the premises, which were taken on rent by the State bank of Patiala, were inferior to the suit premises. He therefore submitted the mesne profits for the suit premises should be even higher than Rs. 50/- per sq. ft. The said portion of the cross-examination indicate the attempt of the respondent to show that height of the part of premises in possession of State bank of Patiala was less than the suit premises; the suit premises were better situated and had better utility. However, suggestions given to the witness in this behalf are largely denied by the said witness. The respondent on the other hand, has not produced any evidence on this aspect. As mentioned above, the entire attempt of the respondent is to ride on the shoulder of the appellant, as the respondent is relying upon the aforesaid testimony of the appellant's witness. For these reasons we are inclined to fix mesne profits at Rs. 50/- per sq. ft. As mentioned above, the entire attempt of the respondent is to ride on the shoulder of the appellant, as the respondent is relying upon the aforesaid testimony of the appellant's witness. For these reasons we are inclined to fix mesne profits at Rs. 50/- per sq. ft. Finding on issue No. 3 of the learned Single Judge are accordingly set aside and substituted with the following:- (i)Rent from 1st November, 1989 to 31st January, 1990 at the agreed rate of rent of Rs. 10,500/- per month = Rs. 31,500/ -. (ii)Rent from 1st February 1990 to 31st January 1993 at the agreed rate of rent of Rs. 16,000/- per month = Rs. 5,76,000/ -. (iii) Rent from 1st February 1993 to 31st January 1997 at the agreed rate of rent of Rs. 22,500 per month = Rs. 10,80,000/ -. (iv)Damages from 1st February 1997 to 31st March 1999 at the rate of Rs. 50/- per sq. ft. ,. e. Rs. 1,10,000/- per month = Rs. 41,80,000/ -. ( 37 ) THE total amount to which the respondent shall, thus, be entitled to is Rs. 58,67,500/- as rent and damages for the period from 1. 11. 1989 to 31. 3. 1999. From this amount, Rs. 18,49,000/- paid by the appellant bank earlier and Rs. 5,75,797. 91p. paid under the orders of the Court shall be deductible. The appellant bank shall also be entitled to adjust Rs. 1,00,000/- deposited by way of security. Award of interest at the rate of 9% per annum from the date of decree till realisation would remain undisturbed. Decree passed by the learned single Judge is modified accordingly. ( 38 ) THE Registry shall prepare the decree in the aforesaid manner. RFA No. 31/2006 ( 39 ) THERE are certain additional arguments made by the learned counsel for the appellant. However, in view of our decision in the aforesaid appeal (RFA (OS) No. 15/2006) holding that the occupation of the suit premises during the period of sub-lease (here licence agreement) would not be unauthorised and the appellant shall be liable to pay only the contractual rent during this period, it becomes unnecessary to deal with those arguments. Licence agreement in this case was co-terminus with the lease deed. There was unanimity between the counsel for the parties that the period for which damages/mesne profits are payable would be same as in the aforesaid appeal. Licence agreement in this case was co-terminus with the lease deed. There was unanimity between the counsel for the parties that the period for which damages/mesne profits are payable would be same as in the aforesaid appeal. In so far as the rate of mesne profits are concerned, it also cannot be disputed that it would be the same as the premises are contiguous to each other in the same building. However, we may note that the learned trial court has fixed the mesne profits at the rate of Rs. 60/- per sq. ft. per month for the period from July 1993 to July 1996 and at the rate of Rs. 120/- per sq. ft. from July 1996 to March 1999. In so far as the period is concerned, the damages are payable only from 1. 2. 1997 to 31. 3. 1999. ( 40 ) INTERESTINGLY, same/identical evidence was led before the trial court in this suit on the basis of which the aforesaid rates are fixed. Three lease deeds were produced by the plaintiff (respondent herein), which were the same lease deeds produced in CS (OS) No. 1605/1992. However, these lease deeds were not given any credence by the learned Single Judge of this Court and we have expressed our agreement on the reasoning given by the learned Single Judge in this behalf, which has also been extracted while dealing with the issue of mesne profits in the aforesaid appeals. The discussion on fixing the quantum is contained in para-26 of the impugned judgment of the trial court which would reveal that on the basis of the said lease deed, demand of the respondent to claim mesne profits for the period from July 1993 to July 1996 at the rate of rs. 80/- per sq. ft. was held to be excessive and more interestingly, the learned trial court also relied upon the testimony of DW-1 itself in arriving at the particular rate as is clear from the following extracts:- "under the circumstances, keeping in view the fact that as per the testimony of pw2, the Regal Building is about 30-40 years old and the lease agreement filed by him which in respect of the properties which were built after 1990 and the same are centrally air-conditioned, therefore, the claim for the period of July, 93 to July, 96 @ Rs. 80/- per sq. ft. 80/- per sq. ft. per month seems to be excessive. However, dw1 himself admitted in his examination in chief itself that the prevalent market rent for the vicinity of the premises in question is about Rs. 40/- to rs. 60/- per sq. ft. , as such, on his own admission, the plaintiff will be entitled at least to the mesne profits @ Rs. 60/- per sq. ft. per month. Area of the suit premises as per testimony of PW2 is 688 sq. ft. , as such, calculating the mesne profits @ 60 per sq. ft. for this area comes to Rs. 41,280/- for the period of July, 1993 to July 1996. The rate of rent has increased considerably, as such for the next 3 years from July 1996 to March 1999, the plaintiff will be entitled to the damages @ Rs. 120/- per sq. ft. per month which comes to rs. 82,560/ -. " ( 41 ) DW-1 had stated that prevalent market rents are in the vicinity of rs. 40/- to Rs. 60/- per sq. ft. and the learned Single Judge has adopted the upper limit thereof forgetting that the said witness had also deposed that in the same building the State Bank of Patiala had taken the premises at the rate of Rs. 50/- per sq. ft. Moreover, the basis of fixing the damages at the rate of rs. 120/- per sq. ft. for subsequent period is hardly convincing as the only reason given is that "the rate of rent has increased considerably. " We, therefore, are of the opinion that in this case also the mesne profits should be fixed at the rate of Rs. 50/- per sq. ft. per month. Since the suit premises measured 680 sq. ft. , the damages/mesne profits would come to Rs. 34,000/- per month. The decree of the learned trial court is accordingly modified by holding that the respondent shall be entitled to damages at the rate of Rs. 34,000/- per month from 1. 2. 1997 to 31. 3. 1999. This will be subject to adjustment of the amount already paid, including advance deposited, if any. For the period prior to 1. 2. 1997 the plaintiff/respondent shall be entitled to rent at contractual rate. 34,000/- per month from 1. 2. 1997 to 31. 3. 1999. This will be subject to adjustment of the amount already paid, including advance deposited, if any. For the period prior to 1. 2. 1997 the plaintiff/respondent shall be entitled to rent at contractual rate. Interest on the aforesaid amount, as awarded by the learned trial court, shall remain unchanged as no objection was raised by the appellant bank qua the same at the time of argument. Decree be prepared accordingly.