Sunday, 18 February 2018

How to determine reasonable compensation in eviction proceeding?

Though ordinarily interference by this Court would not be warranted, particularly at an interlocutory stage, in the discretionary powers of the Appellate Court to arrive at the 'reasonable' figure in respect of the suit as a condition to the grant of stay to the execution of the decree of eviction, however, looking at the amount of litigation which is being generated on this issue, it would be necessary for this Court to consider if any criteria can be adopted so as to lay down some guidelines for the lower Courts in determining the amount so that the parties do not rush to this Court in every such matter complaining of such grave injustice which would have the effect of facing eviction without availing of their statutory right of appeal because of the fixing of such an amount of compensation/rent which would be excessive to the point of being oppressive. There, of course, cannot be any straight jacket or uniform formula laid down to determine as what can be termed as 'reasonable' and it would entirely depend on the facts and circumstances of each case. Nevertheless, in view of the volume of cases between landlord and tenants, and consequently the number of cases being filed in this Court on this issue, it would be necessary to lay down some parameters on the basis of which this amount can be arrived at. It is to be noted that this 'reasonable' amount so fixed in most cases is an ad hoc amount in absence of any evidence being led in the matter and without any full fledged inquiry which the legislature has contemplated under Order XX, Rule 12 of the C.P.C. The courts therefore have to be circumspect in arriving at this figure as it could have the effect of the appellant- tenant being thrown out of the suit premises, inspite of having a fair chance of success in the appeal, which is but a continuation of the suit, as a result of his inability to pay the amount so fixed by the Court. It is to be noted that what the Hon'ble Apex Court has emphasized and reiterated is the "reasonableness" of the amount.

14. In my opinion this would be a fit case to exercise the supervisory jurisdiction of this Court under Article 227 of the Constitution of India so as to examine the issue of 'reasonableness' itself and lay down certain parameters or guidelines so as to avoid manifest injustice. A balance would have to be struck in weighing the equities so that there is no substantial loss to either party. The Court may, for example, consider examining (1) what percentage of the market value in terms of license fee, the premises in question can fetch could be termed as 'reasonable', (2) would this percentage be different in respect of residential premises vis-a-vis commercial premises, (3) which of the parties would be liable to pay the property taxes and other taxes/cess/charges, (this can go to more than 50% of the compensation for commercial premises in Mumbai), (4) whether the amount can be worked out on the basis of rateable value of the suit premises or number of times of the statutory rent or any other method of valuation, (5) how is the amount to be adjusted in case of inquiry under Order XX, Rule 12 of the CPC relating to mesne profits, (6) when can the amount awarded said to be unreasonable or oppressive or resulting in manifest injustice, (7) whether any report from an expert is necessary at that stage, (8) would this figure of 'reasonable' compensation be different in case of occupants who are trespassers or licensees who have lost protection of the rent control legislation or tenants holding over, etc.


Writ Petition No. 3332 of 2008

Decided On: 16.06.2008

 Marjorie Passanah and Anr. Vs. Mumtaz Iqbal Shaikh

Hon'ble Judges/Coram:
A.A. Sayed, J.

Citation:2009(1) MHLJ 972

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Whether monetary benefits derived by tenant can be considered by court while granting stay to execution of eviction decree?

 It was the submission of Shri Sanglikar that in terms of the Judgment of the Learned Single Judge in Chandrakant Dhanu's case, the Petitioners i.e. the original Appellants cannot be directed to pay more than a percentage of the prevalent market licence fees. In my view, it is not possible to accept the said contention as the factor relied upon by Mr. Sanglikar is only one of the factors amongst other factors which are to be taken into consideration whilst fixing the interim compensation as a condition for grant of stay, but the same would also depend on the facts and circumstances of each case. The Judgment of the Apex Court in Yacob's case (supra) would also have no application as in the said case the issue was of fixation of fair rent i.e. the standard rent under the Bombay Rent Act and it is in the said context that the Apex Court held that the value of the structures has no relevance. The facts of the instant case can be distinguished from the facts of the case that were there before the Apex Court in Yacob's case (supra) as in the instant case, the Petitioners are faced with a decree of eviction in respect of which decree they have sought a stay and therefore the Appellate Bench of the Small Causes Court was entitled to take into consideration amongst other things the monetary benefit that the Petitioners were deriving out of the structures and sheds. It is required to be noted that the suit premises i.e. the land is situated in Byculla that is in South Mumbai and it is about 4 to 5 kilometers from V.T. Station or Chatrapati Shivaji Terminus. The said land can therefore be said to be a prime property in the context of its location. The Petitioners are exploiting the said plot of land which has been leased and assigned to them by letting out the sheds and the structures which have been constructed on the said land. The tabular statement reproduced hereinabove shows that the licencees are Companies as well as the Canadian Consulate from whom the Petitioners have taken rent free deposit as also are getting handsome licence fees. The conduct of the Petitioners shows that they have let out the premises when the Suit was pending. As can be seen from the tabular statement for an area of 6865 sq.ft. the Petitioners are getting licence fees of Rs. 4,32,500/- per month. Faced with the situation wherein the valuation report produced by the Petitioners shows very low figure of Rs. 3,62,409/- and the valuation report of the Respondents shows a very high figure of Rs. 27,38,353/-. The Appellate Bench of the Small Causes Court took upon itself to fix the compensation having regard to the following factors namely land being lease hold, zone in which land is situated , available FSI, non touch road, structures being licenced, non onerous to the Appellants and non denying the right of the Appellants and fixed the compensation at Rs. 10,00,000/- per month and also directed the deposit of said amount from a particular date and directed the Petitioners to furnish undertaking in terms of the operative part of the impugned order.

13. In so far as the amount fixed by the Appellate Bench of the Small Causes Court is concerned, the said amount would also have to be considered in the context of the licence fees and the interest free deposits which the Petitioners are getting from the licensee who are in occupation of various sheds in the suit premises. This is in view of the fact that by the judgments of the Apex Court it is well settled that the decree holder is required to be compensated for the loss caused to him on account of the decree being stayed. If the said principle is applied, then the amount fixed at Rs. 10,00,000/- per month cannot be said to be excessive, exorbitant or fanciful, as has been observed by the Apex Court in the case of Supermax International Pvt Ltd


Writ Petition No. 4230 of 2017

Decided On: 05.05.2017

Hasanali Hasambhoy Jetha and Ors. Vs. Razia Yusuf Noorani and Ors.

Hon'ble Judges/Coram:
R.M. Savant, J.

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Whether decree for eviction can be passed in appeal if standard rent is not paid during pendency of appeal?

The Apex Court in Mranalini B. Shah and Anr. v. Bapalal Mohanlal Shah A.I.R. 1980 S.C. 353, considered the expression "regularly" as used in Section 12(3)(b) of the Bombay Rent Act. The Apex Court held that the provisions of Clause (b) of Section 12(3) are mandatory and must be strictly complied with by the tenant during the pendency of the suit or appeal if the landlord's claim for eviction on the ground of default in payment of rent is to be defeated. The Apex Court further observed that if the tenant persistently defaults during the pendency of the suit or appeal in paying the rent, the Court has no discretion to treat what were manifestly irregular payments as substantial compliance.

13. In Lalchand Jematmal v. Ramchhodbhai Shankerbhai Patel and Ors. A.I.R. 1968 Guj 172, the Full Bench of the Gujarat High Court interpreted Section 12(3)(b) of the Bombay Rent Act. The Full Bench of the Gujarat High Court observed as under:

In the light of the above discussion we hold that Section 12(3)(b) of the Rent Act) applies even at the appellate stage and the words "till the suit is finally decided" occurring in Section 12(3)(b) refer also the decision of the suit in appeal by the Appellate Court when an appeal is preferred by the landlord against a decree passed by the trial Court dismissing his suit and the question arises before the Appellate Court whether the tenant is entitled to the protection of Section 12(3)(b), the Appellate Court would have to consider whether the tenant has, after paying or tendering in Court the arrears of standard rent and permitted increases on the first day of hearing of the suit or, op. or before such other date as might have been fixed by the Court, continued to pay or tender in Court regularly the standard rent and permitted increases till the decision of the appeal.
There cannot be duality of opinion that the appeal is continuation of the suit. It is imperative, therefore, that cause of action for the suit would continue even during pendency of the appeal. The Appellate Court is entitled to take cognizance of the subsequent developments. It is difficult to countenance the argument, therefore, that nonpayment of the standard rent during pendency of the appeal would give rise to separate cause of action and such an event cannot be taken into account so as to pass decree under Section 12(3)(b) of the Bombay Rent Act.


Writ Petition No. 22 of 2002

Decided On: 28.04.2009

Hari Bhuraji Mahajan and Ors. Vs. Rajendra Shankar Dawknor and Ors.

Hon'ble Judges/Coram:
V.R. Kingaonkar, J.
Citation: 2009(6) MHLJ483
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Whether drawing inferences form established facts is a point of law?

As has been held by this Court, the issue of subletting can be established on the basis of legitimate inference drawn by a court. In P. John Chandy and Co. (P) Ltd. v. John P. Thomas MANU/SC/0382/2002 : (2002) 5 SCC 90, while dealing with a controversy under the rent legislation arising under the Kerala Buildings (Lease and Rent Control) Act, 1965, it has been ruled that drawing inference from the facts established is not purely a question of fact. In fact, it is always considered to be a point of law insofar as it relates to inferences to be drawn from finding of fact. We entirely agree with the aforesaid view. When inferences drawn do not clearly flow from facts and are not legally legitimate, any conclusion arrived at on that basis becomes absolutely legally fallible. Therefore, it cannot be said that the High Court has erred in exercise of its revisional jurisdiction by substituting the finding of fact which has been arrived at by the courts below. Therefore, we have no hesitation in holding that the High Court has not committed any illegality in its exercise of revisional jurisdiction under the obtaining facts and circumstances.


Civil Appeal No. 4189 of 2014 (Arising out of SLP (Civil) No. 29888 of 2010)

Decided On: 28.03.2014

S.F. Engineer Vs.  Metal Box India Ltd. and Anr.

Hon'ble Judges/Coram:
Anil R. Dave and Dipak Misra, JJ.
Citation: AIR 2014 SC 2189
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