Sunday, 5 January 2020

Bombay HC: Scope of inquiry for grant on interim compensation while granting stay to eviction decree

This Court in Previn Govind Sharma v. Dinyar Jal Jamshedji  Decided on 21st June 2019 has
considered the issue in detail. After examining the above decisions besides others, it
has held that this Court under Order 41, Rule 5 CPC does not fix mesne profits per
se. If this Court indulges in a threadbare analysis and judicially determines the
relative merits of the rival mesne profits reports at an interlocutory stage—more so
under Order 41, Rule 5 of CPC—that preempts the trial Court’s legitimate
adjudicatory powers under Order 20, Rule 12 of CPC. Here, what this Court
intends, or requires, to do is to use the “commonsense which is a cluster of life's
experiences” rather than depend on the rival facts presented by warring litigants.”
Pragmatic Pursuit:
29. Then, Previn Govind Sharma has recorded what could be a pragmatic
approach. Indeed, any adjudication, if it were, under Order 41, Rule 5 of CPC
involves an element of ad hocism, a permissible level of guesswork, and a dose of
discretion. The interim compensation, I may note, is to ensure that neither party
gets an unfair advantage over the other. Either too high an amount or too low an
amount as compensation prejudices one or the other party. The whole endeavour
under Order 41, Rule 5 of CPC is to keep the rival parties on an even keel. It is a
balancing act between the competing interests of a party who secured a decree and a
party who entertains the hope of emerging successful in the appeal proceedings.
30. Order 41, Rule 5, we may note, is a step-in-aid in appeal. The respondent
has the reality of decree; the appellant the possibility of its reversal. The decree, say  in an eviction suit, alters the characters of parties. The tenant is no longer a tenant;
he is, at best, an occupant. And that occupation stands branded as unauthorised.
The suspension of the decree does not obliterate the judicial findings; it only keeps
its effect—its execution—at bay. So to have a binding decision put on hold in the
name of stay, the appellant needs to submit himself to certain terms. The terms of,
for example, paying monetary compensation.
31. If we continue in the same vein, a stay is not for mere asking. Nor can the
appellant paint himself a victim under Order 41, Rule 5 of CPC. That said, I must
also acknowledge that the appellate courts will not lose sight of the distinction
between what is ideal and what is practical; what is discretionary and what is
arbitrary; what is a fair guess and what is a wild whim.
32. With the judicial overload, docket explosion, and clogging adjudicatory
avenues at every echelon, we cannot expect a minitrial even under Order 41, Rule 5
of CPC, for fixing, say, an interim compensation. It is ideal. But with the litigious
multitude knocking at the court’s doors clamouring for speedy justice, it is an
unaffordable legal luxury.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.13100 OF 2018

Ishwarlal Vrajlal Mistry vs.  Manohar U. Shetty



CORAM: DAMA SESHADRI NAIDU, J.
JUDGMENT DATE: 18th December 2019


Heard finally at the admission stage by the parties’ consent.
2. There are two writ petitions: W. P. No.13100 of 2018 and W. P. No.13102
of 2018. They both impugn an interim order passed by the Appellate Bench of the
Small Causes Court. To elaborate, the impugned orders stay the operation of the
decree secured by the respondent-landlord subject to the writ petitioners’ paying
interim compensation.
3. If I go through the details, I note that in 1961 the respondent Trust leased
out 435 sq. yards open space to the petitioners in W.P. No.13100 of 2018. The
Petitioners could raise a structure and use it for the next 40 years. A formal
agreement, it seems, was executed in 1964. Both the Trust and the petitionersoriginal
tenants agreed that the tenants could construct four floors, that is groundplus-
three floors. The initial lease was 40 years, to be renewed one more term: 40
more years.
4. During the lease period, in 1963 the original tenant raised a structure. He
constructed five shops on the ground floor and started using three upper floors as
lodgings for prospective customers. Similarly, the Trust has leased out the terrace
portion of an existing building in the same compound and permitted the original
tenant to raise one more floor. That newly to-be-added floor could be used as a
residence. Besides that, it has also leased out three garages near the existing
building.
5. The lease ended in 2001. Meanwhile, the Trust assigned its leasehold
rights to the original respondent, whose legal heirs are now on record. In 2005, the
respondent assignee filed RAE & R Suit No.68/120/2005. He sought the tenants’
eviction on the grounds of illegal subletting and change of user. Later, he has also

filed RAE Suit No.79/124/2008, about the same property. This time the eviction
was sought because the tenant’s sub-lessee has been using the property for illegal
and immoral purposes. Eventually, on 30th January 2018, the trial Court decreed
both the suits: eviction was ordered.
6. Aggrieved, the original lessees filed four appeals, but they challenged the
judgment only in Suit No.79/124/2008. Similarly, the alleged sub-lessee, that is the
second defendant, filed Appeal No.160/2018. He, too, challenged only one
Judgment, the Judgment in RAE Suit No.68/120/2005.
7. In two appeals, they wanted the appellate Bench of the Small Cause Court
to stay the operation of the decree in both the suits. Then, the appellate Bench,
through impugned orders, stayed the decree subject to a condition: the tenants, as
the appellants, should pay the monthly compensation at the rate determined by the
appellate Bench. In this background, the appellants filed two writ petitions—WP
No.1300 and 1301 of 2018—against the orders in the two appeals: Appeal
No.160/2018 and 161/2018.
Submissions:
Petitioners:
8. Shri Godbole, the learned counsel for the petitioners in both the writ
petitions, has submitted that the Trust itself was a lessee; it is not the owner. It has,
thus, subleased the property to the petitioners. Drawing my attention to the lease
agreement, Shri Godbole has argued that what was given to the petitioners was a
piece of open land, upon which, by expending huge amounts, the original tenant
raised superstructures. Therefore, considering the nature of the property leased out,
the appellate Bench ought to have determined the compensation. Plainly put, the
interim compensation must have been on the vacant land, but not on the structures
the original tenant has raised.

9. Shri Godbole has emphasised the case holding of Atma Ram Properties
(P) Ltd., v. Federal Motors (P) Ltd.[1], and submitted that whatever structure the
original tenant has raised would amount to an improvement on the leased property
by the tenant. And, while determining compensation, the courts must exclude those
improvements from the reckoning. Finally, he has submitted that the appellate
Bench has considered even the staircase, passage, actual carpet area, and so on,
which is impermissible. So, Shri Godbole asserts that the compensation fixed is
exorbitant.
10. Shri Godbole, in the alternative, has submitted that the appellate Bench
missed out on the vital aspects of the property when it determined the
compensation. Then, he has repeatedly stressed, what he calls, the best course of
adjudication for this Court: remanding the case to the appellate Bench for a fresh
reconsideration, keeping in view not only the ratio of Atma Ram Properties (P)
Ltd., but also the Judgment of this Court in Chandrakant Dhanu vs. Sharmila
Kapur[2].
11. Eventually, Shri Godbole has submitted that the petitioners have placed
no material before the appellate Bench for it to justify the compensation. According
to him, even the valuation report the lessors have placed before the appellate Bench
is exaggerated and lopsided. To justify the lessees’ demand for remand, Shri
Godbole assures the Court that the lessees will continue to pay the compensation
determined by the Appellate Bench until it reconsiders the issue.
Respondents:
12. Shri Vernekar, the learned counsel for Respondent Nos.1A to 1D has
submitted that the appellate Bench has considered all aspects, including those
suggested in the valuation report. The valuation report, according to him, showed
1 (2005) 1 SCC 705
2 2009 (2) Mh.L.J. 243

certain rates as plausible rates of rent the property could fetch. But the appellate
Bench has disregarded them all and fixed the compensation at 50% of what has
been suggested by the valuer. Thus, it has applied its mind and arrived at a rational
rate.
13. Shri Vernekar has also submitted that this Court in Super Max
International Pvt. Ltd. v. State of Maharashtra[3], has held that the property is
expected to fetch returns, at least, @6% of the value reflected in Ready Reckoner. If
we go by the interim compensation fixed by the appellate Bench, according to him,
the proportionate valuation the appellate Bench has taken is not at all exorbitant. In
this context, Shri Vernekar has also pointed out that the properties are used for
commercial purposes. And considering their use and potential, the appellate Bench
has duly noted these aspects and fixed the compensation. At any rate, Shri Vernekar
has submitted that the appellate Bench had exercised its discretion, which this
Court ought not to disturb, for there are no compelling reasons to do so. Thus, he
has urged the Court to dismiss the writ petitions.
14. Heard Shri Godbole, the learned counsel for the petitioners; and Shri
Vernekar, the learned counsel for the respondents.
Discussion:
15. There is neither factual nor procedural controversy here. The landlords
succeeded in their suit for eviction; the tenants and those claiming through those
tenants have challenged the judgment and decree of eviction. In the appeal, the
appellate Bench of the Small Cause Court stayed the judgment and decree. And that
stay was subject to a condition: the appellants must pay monthly interim
compensation to the landlords for the use and occupation of the leased properties.
The dispute has arisen about the quantum, in fixing which the appellate Court has
3 2009 (2) BCR 789

exercised its discretion. Has it exercised its discretion perversely or without
justification? That is the question I must answer.
16. One of the tenanted buildings is on a plot of 435 sq. yards; the whole
structure is called “Arunoday.” It has a ground floor with five shops, besides three
upper floors. Another tenanted building is “Marble Arch’’; its third floor is the
tenanted portion, for the original tenant was permitted to build on the terrace of the
second floor. Besides, there are three garages.
17. The tenancy began in 1961, and the lease was entered into in 1963. It was
for 40 years, extendable by one more term of the same period. Both the original
lessor and the original lessee are no more; their legal representatives are litigating
now. Besides, a third party—that is a sublessee or a trespasser, as the courts to decide
—has also been in the fray.
18. We need not refer to the rival contentions on the merits of the case: the
alleged breach of lease conditions, illegal subletting, unauthorized—even immoral
use—of the leased property, and so on. We will confine our discussion to the
interim compensation: to be specific, its quantum. But before proceeding further,
we will examine the precedential position, for the appellants have heavily relied on
them. Earlier this Court in Suhas Janardan Chavan v. Rajesh Housing Pvt. Ltd.,Judgment, dt.28.08.2019, in WP No.9384 of 2018 & Batch 
has examined threadbare most decisions affecting the question of interim
compensation. I will substantially reproduce the Court’s observations then made.
19. Invariably, as Order 41 Rule 5 of CPC mandates, the mere filing of an
appeal does not arrest the operation of the decree. But pending the appeal, if the
decree was executed, that would render the appellant’s possible success in the appeal
nugatory—an empty formality or ritual. So the Code, under Order 41, Rule 5,
contemplates or provides for maintaining status quo ante until the suit proceedings

reach their logical conclusion. For the appeal is in continuation of the original
proceedings. But that prohibition of the statute quo ante comes with conditions
attached, including compensation, as stated in Order 41 Rule 5(3)(c) of CPC. In
this statutory backdrop, let us examine the precedential position.
(a) Atma Ram Properties:
20. In Atma Ram Properties, the Rent Control Tribunal ordered the
respondent-tenant to pay interim compensation at a particular rate for its staying
the decree. The tenant challenged it before the High Court; he contended that the
Tribunal ought not to have required him to deposit more than the contractual rent.
The High Court accepted that contention; it modified the stay order. So the
appellant-landlord went to the Supreme Court.
21. In Atma Ram Properties, the Supreme Court observed that “the litigation
goes on for an unreasonable length of time and the tenants in possession of the
premises do not miss any opportunity of filing appeals or revisions so long as they
can thereby afford to perpetuate the life of litigation and continue in occupation of
the premises.” It has, then, observed that once the lease or tenancy stands
determined, say, through a decree from a competent court, the tenant’s right to
continue to possess the leased property ends. And for his continued use and
occupation of the property for any period thereafter, he must pay damages at the
rate the landlord could have let out the premises if there had been no tenant or the
tenant had vacated with the lease termination. Thus, Atma Ram Properties has
summed up the principles of interim compensation:
(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 in so far 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 (l) 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 later
date.
(italics supplied)
(b) Super Max International:
22. In this case, a three-Judge Bench of the Supreme Court had a reference
before it. The reference was because of what was felt to be a conflict between two of
its Division Bench decisions: Atma Ram Properties and Niyas Ahmad Khan.
23. Then, Super Max International has held that there was no conflict
between Atma Ram Properties and Niyas Ahmad Khan v. Mahmood Rahmat Ullah
Khan[5]. In Atma Ram Properties the landlord challenged the restriction that he
should not withdraw the amounts the tenant deposited pending the appeal. The
High Court allowed his application under Article 227 of the Constitution of India.
The Supreme Court restored the Tribunal’s order: the landlord should not
withdraw the amounts. In Niays Ahmad Khan, the High Court awarded enhanced
interim compensation unasked for. In that factual backdrop, the Supreme Court has
disproved the High Court’s approach.
5 (2008) 7 SCC 539

24. In the end, after exhaustively analysing the issue of interim
compensation, Super Max International has held that “in an appeal or revision
preferred by a tenant against an order or decree of an eviction passed under the
Rent Act, it is open to the appellate or the revisional Court to stay the execution of
the order or the decree on terms, including a direction to pay monthly rent at a rate
higher than the contractual rent.” That said, it has cautioned that in fixing the
amount, “the Court would exercise restraint and would not fix any excessive,
fanciful or punitive amount.”
25. Then, Super Max International has held that the amount fixed by the
court over and above the contractual monthly rent, ordinarily, should not be
directed to be paid to the landlord during the pendency of the appeal/revision. The
deposited amount, along with the accrued interest, should only be paid after the
final disposal to either side, depending on the result. If the Court finds it just and
expedient that the amount fixed by it should go to the landlord even while the
matter is pending, it must be careful to direct payment to the landlord on terms so
that if the final decision goes in the tenants’ favour, he can recover the amounts
with no undue delay or complication.
(b) Chandrakant Dhanu:
26. In Chandrakant Dhanu v. Sharmila Kapur 2009 (1) Bom CR 698

, the petitioners-tenant
suffered a decree of eviction. In the appeal, the appellate Bench of the Court of
Small Causes, fixing Rs.50,000/- as the monthly compensation for the tenant to
pay as a precondition to have the decree stayed. Aggrieved, he filed a writ petition
before this Court.
27. Chandrakant Dhanu, per a learned Single Judge, holds that “there is no
question of fixing any compensation without any basis. The burden is on the


landlord to prove his claim of fair and reasonable compensation by putting the
material on record, including expert opinion report and other such instances etc.” It
permits the tenant, too, to show the contra material, if any.
What is determined now?
28. This Court in Previn Govind Sharma v. Dinyar Jal Jamshedji  Decided on 21st June 2019 has
considered the issue in detail. After examining the above decisions besides others, it
has held that this Court under Order 41, Rule 5 CPC does not fix mesne profits per
se. If this Court indulges in a threadbare analysis and judicially determines the
relative merits of the rival mesne profits reports at an interlocutory stage—more so
under Order 41, Rule 5 of CPC—that preempts the trial Court’s legitimate
adjudicatory powers under Order 20, Rule 12 of CPC. Here, what this Court
intends, or requires, to do is to use the “commonsense which is a cluster of life's
experiences” rather than depend on the rival facts presented by warring litigants.”
Pragmatic Pursuit:
29. Then, Previn Govind Sharma has recorded what could be a pragmatic
approach. Indeed, any adjudication, if it were, under Order 41, Rule 5 of CPC
involves an element of ad hocism, a permissible level of guesswork, and a dose of
discretion. The interim compensation, I may note, is to ensure that neither party
gets an unfair advantage over the other. Either too high an amount or too low an
amount as compensation prejudices one or the other party. The whole endeavour
under Order 41, Rule 5 of CPC is to keep the rival parties on an even keel. It is a
balancing act between the competing interests of a party who secured a decree and a
party who entertains the hope of emerging successful in the appeal proceedings.
30. Order 41, Rule 5, we may note, is a step-in-aid in appeal. The respondent
has the reality of decree; the appellant the possibility of its reversal. The decree, say  in an eviction suit, alters the characters of parties. The tenant is no longer a tenant;
he is, at best, an occupant. And that occupation stands branded as unauthorised.
The suspension of the decree does not obliterate the judicial findings; it only keeps
its effect—its execution—at bay. So to have a binding decision put on hold in the
name of stay, the appellant needs to submit himself to certain terms. The terms of,
for example, paying monetary compensation.
31. If we continue in the same vein, a stay is not for mere asking. Nor can the
appellant paint himself a victim under Order 41, Rule 5 of CPC. That said, I must
also acknowledge that the appellate courts will not lose sight of the distinction
between what is ideal and what is practical; what is discretionary and what is
arbitrary; what is a fair guess and what is a wild whim.
32. With the judicial overload, docket explosion, and clogging adjudicatory
avenues at every echelon, we cannot expect a minitrial even under Order 41, Rule 5
of CPC, for fixing, say, an interim compensation. It is ideal. But with the litigious
multitude knocking at the court’s doors clamouring for speedy justice, it is an
unaffordable legal luxury.
33. Here, in this writ petition, we are dealing with an interlocutory order the
appellant Bench rendered while staying the decree of eviction. This Court can only
examine whether the appellate Bench has properly or judicially exercised its
discretion. Nothing more.
34. The precedents I have already referred to have consistently held that the
interim compensation to be fixed cannot be arbitrary. In the same breath, I must
observe that the appellate Court’s power under Order 41, Rule 5 is discretionary.
And so long as that exercise is not arbitrary or perverse, the Revisional Court, either
under Section 115 of CPC or under Article 227 of the Constitution of India, does
not interfere.

35. Before I could determine what may be the reasonable amount, I must
examine whether the order impugned is arbitrary or perverse. If it is neither, I must
not impose my view over that of the appellate Bench. Merely because an alternative
view is possible, the Revisional Courts will not upset otherwise well-founded orders
of discretion. Judicial interference requires much more than a plausible or a
probable alternative view.
Back to Brass-tacks:
36. The lessor has pleaded that the leased property would fetch Rs.
6,25,480/- per month as per the Valuers Report. It insisted that the appellants are
also liable to pay the compensation on other incidental grounds.
(a) Marble Arch:
37. As per the valuer’s report, the lessor has claimed market rent at Rs.108/-
per sq.ft for the third floor of Marble Arch; it comes to Rs. 3,92,6156/- per month.
The lessor has claimed market rent for the garages at Rs.2,32,865/- per month. It
wants the lessees not to part with the possession of the suit property or create thirdparty
interest.
38. The lessees wanted to reckon the leased property only as vacant land.
And their every other plea is connected to this plea. Of course, they have also
assailed the valuation the lessor has presented.
39. On facts, the appellate Bench has noted that the area of the third floor of
Marble Arch in the valuation report is 3,635 sq. ft. The carpet area is claimed to be
2,629 sq. ft. In fact, the lessor has accepted that the area of 3635.32 sq. ft; that is,
the third floor of Marble Arch includes common space, such as staircase, balcony.
Excluding common areas, then, it comes to 3,188 sq. ft.
40. To sum up, the appellate Bench has recorded the lessor’s claim for rent as
follows:

(a) Rent @ Rs. 108/- per sq. ft for the residential premises—that is, the third
floor of Marble Arch building;
(b)Rent @Rs.6944.44 ps per sq. ft., for the three garages, situated behind
Arunoday building;
(c) Rent Rs. 1,77,848/- for the open land.
41. Then, the appellate Bench has examined and analysed the valuation
report, besides the Ready Reckoner for Zone No. 17/115, between Lady Jamshedji
Road portion, Gadkari Chowk, and City Light Cinema Junction. It has also taken
note of the Ready Reckoner the appellants have filed in Appeal No. 161 fo 2018. It
relates to Zone No. 17/118, covering the locality where the suit property stands.
The valuation in that Ready Reckoner, as the appellate Bench notes, is “slightly on
the lower side.”
42. To the credit of the appellate Bench, it has compared the rental values of
the properties in the vicinity. Then, it has noted the plea of one of the appellants
that he is a plumber and that, because of his old age, he can pay “at the most Rs.
20,000/- per month for the whole premises.”
43. Then the appellate Bench has recorded:
“It is not disputed that the appellant has made a statement across the bar
the he is ready to continue to pay the municipal takes in respect of the suit
premises. In question, apart from the compensation amount. The
appellant has also made a statement that he would furnish the details of
the occupants and will not create any third-party rights.”
44. Finally, the appellate Bench has fixed the rental value of the property in
Marble Arch, admeasuring 3188 sq. ft, @Rs.40/-, as against Rs. 108/- per sq. ft the
lessor has claimed. In fact, the appellate Bench has found that the property is used
for residential purposes. The total has, thus, come to Rs.1,27,520/- per month.

45. The appellate Bench has found the three garages measuring up to
415.08 sq.ft. They are used for “stitching of readymade garments by the subtenants”.
So the appellate Bench has found it, rightly so, to be commercial use. But
the appellate Bench has pointed out that the respondent lessor has not spelt out
how he claimed compensation @Rs.6,944.44 ps per sq. ft. It has felt it to be
exorbitant. Then, the appellate Bench considered the locality, purpose, and the
nature of business, felt that the shops would not fetch more than @ Rs.100/- per
sq. ft. As such, the approximate market rent was fixed at Rs.1,30,400/ for the
shops.
46. For the open space 300 sq. ft., the appellate Bench has fixed the
compensation @ Rs.25/- per sq.ft., the total being Rs.75,000/-. It was against the
lessor’s claim for Rs. 1,77,848/-.
Arunoday:
47. The tenants or their assignees have three floors in their possession, the
total extent being 4434 sq. ft. They run a lodge there. The lessor claimed
compensation @ Rs.108/- per sq. ft. But the appellate Bench has compared the
rental values in the vicinity and felt that Rs.60/- per sq. ft., is justified. There are
five shops on the ground floor, admeasuring 1,304 sq. ft.
48. For the five shops in the ground floor, the Valuer’s Report has given
Rs.399/- per sq. ft., rent. for the five shops. After a thorough analysis, the appellate
Bench has fixed the rent at Rs.100/- per sq. ft., the total coming to Rs.1,30,400/-.
Conclusion:
49. I reckon the appellant Bench orders are well-reasoned and impeccable.
They need no interference. It may be interesting to note that the lessees do not
seem to have filed any valuation report, besides relying on the Ready Reckoner.
The appellate Bench has fixed the compensation at the rates lower than those

shown in the Ready Reckoner. So this Court’s remanding the matter, as the lessees
have insisted, serves no purpose.
50. In matters like these, the scope for judicial interference by the revisional
courts is narrow. More particularly, the appellate Bench has exercised its discretion;
that discretion it has exercised judiciously.
I, therefore, dismiss both the writ petitions as devoid of any merit.
In view of disposal of the writ petitions, the civil applications, if any, stand
disposed of.
If the petitioners have deposited any amount before the Registry of this
Court in compliance with the Court's directions, as these Writ Petitions now stand
disposed of, the Registry will transmit the amount to the Registry of the Small
Causes Court, Mumbai.
[DAMA SESHADRI NAIDU, J.]

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