In The Matter of: Kanak Projects v. Oil And Natural Gas Corporation
2013-12-24
I.P.MUKERJI
body2013
DigiLaw.ai
Judgment : I.P. Mukerji, J. This is an application by the plaintiff in aid of the above suit. The reliefs claimed are as follows: “a) The respondent be directed to show-cause as to why it should not be directed to furnish security of Rs.6,42,44,194/-; b) On failure to show cause and/or sufficient cause, the defendant be directed to furnish security of Rs.6,42,44,194/- and/or its assets and property mentioned in paragraph 25 be attached; c) The respondent be restrained from dealing with, disposing of, alienating, selling transferring and/or assigning the property mentioned in paragraph 25; d) The respondent be directed to deposit Rs.15,08,825.30/- per month and/or such other sum as this Hon’ble Court deems fit and proper; e) Ad interim orders in terms of prayers aforesaid; f) Such further or other order or orders be passed and/or direction or directions be given as to this Hon’ble Court may deem fit and proper.” The facts tell a tale of how the tentacles of law and its delay prevent real justice to be done between the parties. The litigation between the parties is raging from 1985, without any abatement. It concerns a large part of a four storied building, which is numbered as premises no. 41, Chowringhee Road, Kolkata – 700 071. It is at the junction of Chowringhee Road and Middleton Road, one of the most expensive areas of this city. This part of the city has many commercial establishments. The defendant occupies 13,235.31 sq. ft. of this building, comprising of 10835.31 sq. ft. on the second floor of the main building and 2400 sq. ft. on the third floor of the annexee building. A further 120 sq. ft. was permitted to be used by them for running a generator. The tenancy of the defendant was terminated by the plaintiff by a notice dated 17th July, 1984. They were asked to deliver up vacant possession of the premises after August, 1984. The plaintiff instituted a suit in this court in 1985 against the defendant (Suit No. 440 of 1985) claiming, inter alia, possession of this property. Now, I come to the most important part of the sequence of events. The parties entered into a Terms of Settlement on 27th March, 1987. By these terms they promised that each would act according to the Indenture of lease dated 9th September, 1986.
Now, I come to the most important part of the sequence of events. The parties entered into a Terms of Settlement on 27th March, 1987. By these terms they promised that each would act according to the Indenture of lease dated 9th September, 1986. On 31st March, 1987, this Court passed a compromise decree in accordance with those terms. Now, the terms of the lease become important, especially, the part providing that it commenced from 1st April, 1986, for a period of 21 years and the covenant that the defendant would “vacate and makeover peaceful possession of the demised premises to the lessor on the expiry of the lease”. Furthermore, there was a provision for periodic escalation of rent. The plaintiff on their interpretation of the lease and the compromise decree of 31st March, 1987 thought that the defendant had to give them back possession of the property, after the expiry of the lease, in obedience to the compromise decree. The defendant challenged the authority of the plaintiff to get possession by virtue of the compromise decree. This is manifest from the stand they took when the plaintiff filed an execution case (E.C. 81 of 2007) to enforce the decree. They filed an application under Section 47 of the Code of Civil Procedure. The application (G.A. No. 3618 of 2007) was heard by Patherya J. Her ladyship passed a judgment and decree on 12th April, 2012. The Section 47 application was allowed. The decree dated 31st March, 2007 was taken to be a mere endorsement of the lease. If the defendant did not vacate the property after 31st March, 2007, it was seen as a breach of the terms of the lease only and not as a breach of the terms of the decree, following the decision of the Hon’ble Supreme Court in Sudhir Kumar Vs. Baldev Krishna Thapar reported in (1969) 3 SCC 611 . I am told that the plaintiff preferred an appeal from the decree which is still pending.
Baldev Krishna Thapar reported in (1969) 3 SCC 611 . I am told that the plaintiff preferred an appeal from the decree which is still pending. Meanwhile, the defendant filed a suit (C.S. No. 64 of 2007) against the plaintiff for the following reliefs: “a) The Decree for determination of rent for the demised portion of premises No.41, Chowringhee Road, Kolkata – 700 071 more fully described in Annexure “A” hereto for the period commencing from 1st April, 2007 after taking into consideration, the relevant factors stated in paragraph 9 above; b) Notice dated 10the February, 2007 and 22nd February, 2007 as corrected by Letter dated 23rd March, 2007 being annexure “D” and “E” collectively hereto be adjudged, void, delivered up and cancelled; c) Declaration that the plaintiff is a monthly lessee/monthly tenant of the demised portion of the said suit premises No.41, Chowringhee Road, Kolkata – 700 071 within the jurisdiction as aforesaid more fully described in annexure “A” hereto; d) Perpetual injunction restraining the defendant from interfering with the plaintiff’s possession, occupation and user of the demised portion of the said premises No.41, Chowringhee Road, Kolkata – 700 071 within the jurisdiction as aforesaid more fully described in annexure “A” hereto; e) Receiver; f) Injunction; g) Cost; h) Further and/or other relief.” That suit is pending. In the same year the plaintiff instituted the instant suit against the defendant (C.S. No. 231 of 2007) for the following reliefs: “a) A decree of Rs.95,19,346/- as mentioned in paragraph 13 hereof; b) A decree for mesne profits at a rate of Rs.45,000/- per diem from 01.04.2007 until vacant possession of the suit premises is obtained; c) Alternatively a decree of Rs.95,19,346/- as mentioned in paragraph 13 hereof; and @ Rs.45,000/- per diem from 01.04.2007 until vacant possession of the suit property is received by the plaintiff; d) In the further alternatively and enquiry into loss and damage suffered by the plaintiff and a decree for such sum as may be found due and payable on such enquiry being made; e) Attachment; f) Receiver; g) Costs; h) Further and/or other reliefs;” It is still pending. It is in aid of this suit that the instant application has been made.
It is in aid of this suit that the instant application has been made. In this application, to put it very shortly, the plaintiff wants the defendant to secure occupation charges at the market rate, with the Registrar Original Side or any other officer designated by this Court. On the other hand, the defence of the defendant in this application is plain and simple. They think that there is no rule of law by which this Court can order them, in an eviction suit, to pay mesne profits in the shape of occupation charges, on an estimation basis as an interim order. The Court ascertains and quantifies the unliquidated damages claimed, as liquidated damages at the conclusion of the trial of the suit or appeal or any other proceeding where the issue is pending. It does so to enable it to pass a final decree. P.N. Bhagwati J. in the case of Union of India Vs. Raman Iron Foundry reported in AIR 1974 SC 1265 cited by Mr. Mitra said the following: “9. ………………….. Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages.” A learned Single Judge of this Court in the case of Jai Balaji Industries Ltd. Vs. Hyquip Systems Pvt. Ltd. reported in 2010 (4) CHN 87 , also cited by Mr. Mitra opined that a claim in unliquidated damages could not even give rise to a strong prima facie case for passing an order of attachment. According to the Bombay High Court in the case of Dena Bank Vs. K. Motiram Vakil And Others reported in 70 Company Cases 350 also cited by Mr. Mitra, a claim in unliquidated damages did not create any liability. The ratio of the case of Union of India Vs. Raman Iron Foundry reported in AIR 1974 SC 1265 , Dena Bank Vs.
K. Motiram Vakil And Others reported in 70 Company Cases 350 also cited by Mr. Mitra, a claim in unliquidated damages did not create any liability. The ratio of the case of Union of India Vs. Raman Iron Foundry reported in AIR 1974 SC 1265 , Dena Bank Vs. K. Motiram Vakil And Others reported in 70 Company Cases 350 and Jai Balaji Industries Ltd. Vs. Hyquip Systems Pvt. Ltd. reported in 2010 (4) CHN 87 should be seen in this way. The plaintiff has got no right to any unliquidated damages. He has a right to claim it only when it is liquidated. The power of the Court to assess damages provisionally on reasonable estimation of the Court, pending determination of a suit for eviction has never been questioned as would appear from the ratio in the case of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. reported in (2005) 1 SCC 705 and Purushottam Das Bangur And Others Vs. B. Majumdar Samajpati & Sons Hotel Private Limited reported in (2008) 7 SCC 447 . The case of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. was cited by Mr. Ranjan Bachawat, learned Advocate for the plaintiff. In that case there was a decree for eviction against the respondent-tenant. The tenant was up in appeal. All this while the tenant had been paying a paltry rent of Rs.3.790 per month. During pendency of the appeal the rent controller had increased the rent to Rs.15,000/- per month on his own estimation of fair rent or occupation charges. The Madhya Pradesh High Court on an Article 227 Application set aside this order. An appeal was preferred before the Supreme Court. Chief Justice R.C. Lahoti speaking for the Court relied on the previous Supreme Court judgment in Marshall Sons & Co. (I) Ltd. Vs. Sahi Oretrans (P) Ltd. reported in (1999) 2 SCC 325 and held that once a decree for possession had been passed and execution was delayed because of pendency of the appeal, “it is necessary for the Court to pass appropriate orders so that reasonable mesne profits which may be equivalent to the market rent is paid by a person who is holding over the property”. His lordship in paragraph 20 thereof also upheld the determination of mesne profits on an estimation basis by the rent controller.
His lordship in paragraph 20 thereof also upheld the determination of mesne profits on an estimation basis by the rent controller. In the case of Purushottam Das Bangur And Others Vs. B. Majumdar Samajpati & Sons Hotel Private Limited also cited by Mr. Bachawat, which I see as an application of the principle enunciated in Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd., the Hon’ble Supreme Court directed deposit of Rs.25,000/- per month by the user of a terrace pending the determination whether it was part of the tenancy or not. What is most important is that the Hon’ble Court applied the best judgment assessment principle, to pass this interim order. I note that the Division Bench judgment of our Court in the case of Poonam Kejriwal v. Bhagwandas Auto Finance Ltd. & Ors. reported in AIR 2009 Calcutta 221, cited by Mr. Abhrajit Mitra, learned Advocate, described the direction in the case of Purushottam Das Bangur And Others Vs. B. Majumdar Samajpati & Sons Hotel Private Limited as directions by the Hon’ble Supreme Court under Article 142 of the Constitution of India. Now, if the case of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. had been cited before the Division Bench, its conclusion, that a tenant before a decree of eviction and a final decree for mesne profits could not be ordered to pay mesne profits provisionally, may have been different. Take a case like this. Even if the instruments of 9th September, 1986, 27th March, 1987 and 31st March, 1987 are taken as an indenture of lease and not a decree, the lease has expired by efflux of time after twenty one years from 1st April, 1986. No matter what may be contended by the defendant, it is very difficult to believe on the available evidence that the defendant has been continuing as a monthly tenant. Therefore, upon expiry of the said period of twenty one years, the defendant became a trespasser. When the position becomes reasonably clear, prima facie, that a person is in occupation of a premises as a trespasser, then the question arises as to how much occupation charges or damages per month he should pay to retain his occupation. It is settled law that even a trespasser cannot be turned out of the property before a decree is passed by the Court.
It is settled law that even a trespasser cannot be turned out of the property before a decree is passed by the Court. Therefore, from the date a person becomes a trespasser till the date a person is evicted from the premises, a person’s possession is protected by the Court. For this kind of protected occupation a person has to pay occupation charges. Now, if payment of this occupation charge is deferred till a decree is passed and a decree is passed after several decades, the possession becomes very beneficial for the occupant in the sense that the occupant enjoys possession upon payment of no occupation charges at all. He is placed in a more favoured position than that of a tenant. The principle of law laid down in the Supreme Court cases of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. and Purushottam Das Bangur And Others Vs. B. Majumdar Samajpati & Sons Hotel Private Limited becomes most relevant in a case like this, where the defendant is occupying the premises for a very long time after expiry of the lease. Mr. Mitra, learned Advocate cited two cases Central Bank of India Limited Vs. Shree Bhagawati Hosiery Mills Ltd. And Another reported in 70 CWN 670 and Emami Limited Vs. Trimurti Textile Industries reported in 2012 (4) CHN (Cal) 395 to argue that the judgments of the trial Court pending appeal were binding. Furthermore, an appeal was a continuation of the trial Court proceedings. During pendency of the appeal there could not be any res judicata but the matter was res subjudice. He wanted to submit that the notion that the decree of 31st March, 1987 was valid and binding was negated by the judgment and order of Nadira Patherya J. on 12th April, 2012 in the Section 47 proceedings. An appeal was pending from such proceeding which meant that as of now the decree had no force and that whether the decree was valid and binding was res subjudice. Hence, no mesne profit could be awarded. Although Atma Ram dealt with the power of the Appeal Court to grant provisional mesne profit, the principles are the same, if applied to an eviction suit pending before the trial Court. When a suit for eviction is pending before the Appeal Court the appeal is merely a continuation of the trial Court proceedings.
Although Atma Ram dealt with the power of the Appeal Court to grant provisional mesne profit, the principles are the same, if applied to an eviction suit pending before the trial Court. When a suit for eviction is pending before the Appeal Court the appeal is merely a continuation of the trial Court proceedings. It is true that when the case is before the Appeal Court, there is already a decree of eviction. The Appeal Court has to consider the grant of mesne profit considering the decree for eviction. At the trial Court there is no such decree. But the same principles, in my opinion, can be applied. If the trial Court finds that there is absolutely no defence that the defendant has to the claim for eviction made by the plaintiff and that eviction would be a matter of course, it can apply the principles in Atma Ram’s case for award of interim mesne profits pending passing of the final decree. This is more the need when the case is pending for a long time. This is one such case where considering its duration, I would apply the said principle laid down in the case of Atma Ram. The Hon’ble Supreme Court has gone to the extent of saying in this case that the Court has the power of awarding any reasonable compensation for continued use of the property by the defendant. I quote the dicta of the Supreme Court as stated in paragraph 19 and 20 of the judgment: “19. To sum up, our conclusions are: (1) While passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure, 1908, 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 and insofar as those proceedings are concerned. Such terms, needless to say, shall be reasonable. (2) In case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of tenant contained in clause (1) of Section 2 of the Act, the tenancy does not stand terminated merely by its termination under the general law; it terminates with the passing of the decree for eviction.
(2) In case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of tenant contained in clause (1) of Section 2 of the Act, the tenancy does not stand terminated merely by its termination under the general law; it terminates with the passing of the decree for eviction. With effect from that date, 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. (3) The doctrine of merger does not have the effect of postponing the date of termination of tenancy merely because the decree of eviction stands merged in the decree passed by the superior forum at a latter date. 20. In the case at hand, it has to be borne in mind that the tenant has been paying Rs.371.90p. rent of the premises since 1944. The value of real estate and rent rates have skyrocketed since that day. The premises are situated in the prime commercial locality in the heart of Delhi, the capital city. It was pointed out to the High Court that adjoining premises belonging to the same landlord admeasuring 2000 sq ft have been recently let out on rent at the rate of Rs.3,50,000 per month. The Rent Control Tribunal was right in putting the tenant on term of payment of Rs.15,000 per month as charges for use and occupation during the pendency of appeal. The Tribunal took extra care to see that the amount was retained in deposit with it until the appeal was decided so that the amount in deposit could be disbursed by the appellate court consistently with the opinion formed by it at the end of the appeal. No fault can be found with the approach adopted by the Tribunal. The High Court has interfered with the impugned order of the Tribunal on an erroneous assumption that any direction for payment by the tenant to the landlord of any amount at any rate above the contractual rate of rent could not have been made. We cannot countenance the view taken by the High court.
The High Court has interfered with the impugned order of the Tribunal on an erroneous assumption that any direction for payment by the tenant to the landlord of any amount at any rate above the contractual rate of rent could not have been made. We cannot countenance the view taken by the High court. WE may place on record that it has not been the case of the respondent tenant before us, nor was it in the High court, that the amount of Rs.15,000 assessed by the Rent Control Tribunal was unreasonable or grossly on the higher side.” In this case the defendant has not paid any rent since 1st April, 2007. The Court is entitled to put the defendant on terms for occupation of the property on a provisional estimation of mesne profits as laid down in those two cases, subject to the adjudication of final mesne profits at the time of the decree. But the Court should be cautious that the provisional mesne profit should be in no case be more than the mesne profits to be awarded to the plaintiff ultimately. In my estimation the defendant should be directed, which I hereby do to pay a sum of Rs.25/- per sq. ft. for occupation of 13,235.31 sq. ft. of the premises from 1st April, 2007 till 31st March, 2010. It should pay Rs.50 per sq. ft. for the said area from 1st April, 2010 to 31st March, 2012 and Rs.60/- per sq. ft. from 1st April, 2012 onwards. The current occupation charges from January 2014 should be deposited with the Registrar, Original Side every month by the seventh of the month till final mesne profits are decreed. The arrear should also be deposited immediately with him by 31st March, 2014. Upon accumulation of at least Rs.10,00,000/-, the Registrar will create a term deposit in his name in the State Bank of India, High Court Branch, for one year at the prevailing rate of interest and keep the deposit renewed from year to year. This order is executable as a decree. The order for payment of some amount to the plaintiff cannot be made, in the absence of a prayer. This application is allowed to the above extent. Liberty to apply to the plaintiff for further orders. Later: Mr. Ghosh prays for stay of this judgment and order.
This order is executable as a decree. The order for payment of some amount to the plaintiff cannot be made, in the absence of a prayer. This application is allowed to the above extent. Liberty to apply to the plaintiff for further orders. Later: Mr. Ghosh prays for stay of this judgment and order. Considering the fact that the order is only for deposit with the Registrar, Original Side, and the plaintiff will not be the beneficiary of any amount, the prayer, for stay is refused.