Trevor Joseph Harold & Anr vs A. A. Farms And 4 Ors
2014 Latest Caselaw 171 Bom

    jsn                                         1                          CHS No.602_2010


              IN THE HIGH COURT OF JUDICATURE AT BOMBAY 
                  ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                       
                     CHAMBER SUMMONS NO.602 OF 2010
                                   IN




                                                               
                          SUIT NO.1461 OF 1992

    Trevor Joseph Harald D'Silva & Anr.                 ...            Plaintiffs
               Vs.




                                                              
    A A Farms & Ors.                                    ...            Defendants

    Mr   P   A   Jain,   Adv.   a/w.   Mr.   H   Chaudhary,   Adv.   a/w.   Mr.   Vikram 
    Shinde, Adv. a/w. Niket Jain, Adv. i/b. Vigil Juris for plaintiffs.




                                                   
    Mr. Raj Patel, Adv. i/b. Mahendra Patel & Associates for defendant 
    Nos.4 & 5.                   
    Mr. Dinyar Madon, Sr. Adv., a/w. S Y Mulani, Adv. a/w. Mr. Sandesh 
    Patil, Adv. i/b. Mulani & Co. for defendant No.6.
                                
                                           CORAM :   MRS. ROSHAN DALVI, J.


    DATE OF RESERVING THE ORDER                         : 26th November, 2014
            


    DATE OF PRONOUNCING THE ORDER                       : 23rd December, 2014
         



    O R D E R

1. The suit was initially filed in 1992 against defendant Nos.1 to 3. Defendant Nos.4 and 5 have been added as party defendants in 2008.

2. This Court passed an order of appointment of Court Receiver on 24th March, 2009 upon seeing that the defendant Nos.4 and 5 have no right in respect of the suit property. Defendant No.5 was appointed agent of the court receiver and had to pay royalty as determined by the court receiver.

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3. Court Receiver sought valuation of the suit property to determine the royalty. The valuation report was filed on 8 th June,

2009. Defendant Nos.4 and 5 filed objections to the valuation report

on 11th August, 2009. The Court Receiver passed the order of payment of royalty pending the suit on 19 th January, 2010 after obtaining the valuation report. The defendants have challenged that

valuation and consequently the payment to be made to the Court Receiver.

4. The suit property is stated to be agricultural land. It has 800 mango trees. Defendant Nos.4 and 5 claim as lessees of the land.

The lease deeds in favour of defendant Nos.1 to 3 which was for the initial lease of 99 years is challenged in this suit. A rent of Rs.40,000/-

pa was payable thereunder. It was to be increased by 10% after 10 years. The lease is now 24 years in the making. The valuation is

based upon the aspect of what the price of land would be if the value of the land was invested. Upon the valuation of Rs.12 lakhs, the

Court Receiver has ordered Rs.6 lakhs to be paid as royalty.

5. Defendant Nos.4 and 5 would claim that such valuation cannot be made in respect of a lease. Defendant Nos.4 and 5 have relied upon the judgment in the case of Shashikant C Mody & Ors. Vs. Court Receiver, High Court, Bombay, 1998 (3) Bom C R 823 to

show that a property which is tenancy would require to be valued upon the extent of the rent payable. The suit in that case was for determination of ownership. The Court observed that the ownership of the property was yet to be decided, pending which the property was to be preserved and protected. Consequently the valuation made without any real basis was rejected and the payment of the monthly

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rent which was required to be paid regularly was considered as the determinative factor since that was the only amount that was

observed to be required to be paid to preserve the tenancy rights.

Hence it was observed that the Court Receiver could not charge more than the rent as the amount of royalty.

6. Defendant Nos.4 and 5 would claim that the since lease rent is Rs.40,000/- pa and it was to be increased by 10% after 10 years, the royalty amount would have to be fixed at that amount. It

must be remembered that the determination of the declaration sought

by the plaintiffs is that they are owners and have applied for cancellation of certain leases as having been fraudulently executed.

Consequently reliefs upon the document which itself is challenged to determine the amount of royalty would not be the correct mode of determination of royalty.

7. Counsel on behalf of defendant Nos.4 and 5 also relied upon the judgment in the case of Humayun Dhanrajgir & Ors. Vs. Ezra Aboody, 2008 (6) Bom c R 862 upon which he contends that

the basis of valuation was to be the actual letting rate in case of leased property. That was the case of leave and license agreement between the parties with option to purchase. The defendants

exercised the option to purchase which the plaintiff refuted upon the claim of several breaches committed by the defendant. Since the defendant was in possession, the Court Receiver was appointed and the defendant was to pay the monthly royalty. Both parties disputed the amount of royalty payable. The Court had to determine the basis of amount of the royalty. The Court referred to the earliest case of the

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Privy Council in Kamakshya Narain Vs. I T Commissioner, AIR 1943 P C 153 which observed that the royalty was in substance a

rent; it is the compensation which the occupier pays the landlord for

the species of occupation which the contract between them allows. It observed that the concept of royalty was to compensate the rightful owner of the property who permitted to allow others to use his rights

from his property. It observed that during the tenure of the contractual tenancy the tenant had to pay the contractual rent. When notice to quit was given and the tenure became statutory, damages for

use and occupation pending the suit till possession was handed over

was payable. Upon the passing of decree of possession mesne profits was payable. The Court considered the concepts of rent, damages as

also mesne profits and the measure of each of them. The measure of mesne profits that was held was what defendant might receive from the property with ordinary diligence. Thus the claim of mesne profits

is, much like the claim of damages, required to be assessed by proper

exercise of judicial discretion. The Court applied the principles of computation of rent, damages and mesne profits in paragraph 32 of the judgment. The Court held that the test applied for determining

the royalty would be the estimated returns from the suit property and not the estimated value of the property or the estimated loss or profit or income suffered by the owner. Hence that was the value of the

user of the property by the defendant No.2. The Court also held that the prevailing rate of rentals or the rate of rent at which the wrongful person could have found equivalent accommodation or the annual letting value determined by the municipality would have to accounted for.

8. Since the suit property is a lease upon land having mango

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trees it would be feasible and reasonable to determine the estimated returns from the suit property. That would be the value of the user of

the suit property by the defendant.

9. Defendant Nos.4 and 5 would contend that the mango trees yield a mango crop of an average 13 mangoes per tree, per year

and that there are 800 mango trees in the suit property. The statement is absurd and has to be rejected. It is common knowledge, and of which judicial notice is required to be taken, that a mango tree

does not yield such a sparce mango crop each year. It may be that in

given year some trees would not yield the crop. The same tree may yield an abundant crop the next year. The full bloomed tree would

yield thousands of mangoes per season. In any event the estimated returns can be very easily seen and calculated from the next mango crop itself. The actual returns would be the value of the user of the

suit land by the defendant pending the suit. Such value, therefore,

would have to determined by the Court Receiver by calculation of all the mangoes that would grow in the suit land next season and the price obtainable per mango.

10. The Supreme Court considered the monthly rent payable by a tenant upon a decree of eviction. The Supreme Court in the case

of State of Maharashtra & Anr. Vs. M/s. Super Max International P. Ltd. & Ors., AIR 2010 Supreme Court 722 held that upon a suit of eviction between a landlord and tenant, though the tenant may have a right of appeal and later may file a revision in the High Court the tenant would be required and enjoined to pay not only the rent actually paid by the tenant but the rent at the market rate if the

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decree is challenged and sought to be stayed by the tenant. In fact the Supreme Court observed that the appellate or the revisional Court

may refuse to stay the execution of the decree obtained by the

landlord except upon terms including a direction to pay monthly rent at the rate higher than the contractual rent though such an amount could not be excessive, fanciful or punitive. The amount of

Rs.5,40,000/- determined from the stamp duty ready reckoner by the High Court was adjudged reasonable by the Supreme Court though such rent was far in excess of the monthly rent in that case. The

Supreme Court observed that between landlord and tenant, a

balanced and objective approach would be required for determination of the rent payable by the defendant who holds over the tenanted

premises after a decree of eviction.

It is argued on behalf of the defendant Nos.4 and 5 that such an observation is made after the decree is obtained but cannot be made

pending the suit.

11. It may be mentioned that the very order of appointment of Court Receiver would show that the plaintiffs has made out a prima

facie case of their ownership of the suit land and defendant Nos.4 and 5 continued in occupation thereof. Consequently the defendants cannot make a profit out of such holding over of the premises after

the Court Receiver is appointed. Taking the analogy of the case of Humayun (Supra) and of Super Max (Supra) the actual rent, would be the determinative factor. Since that would be the basis of determination of the royalty considering what the defendant might receive from the property with ordinary diligence and which could be higher than the contractual rent also.

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12. In the case of Shrichand Raheja & Ors. Vs. S C Prasad & Ors., 1995(2) Bom C R 145 the division bench of this Court

considered the ascertainment of what was the price range of a

particular land. The principles to determine the fair market value was, upon prior precedents, taken to be on the basis of what hypothetical purchaser willing to purchase the land in open market

would pay the vendor. If the vendor was to sell the land at reasonable price, the authorities would take into account genuine instances. Considering proximity of time and situation and taking

over situation.

This principle also would be dependent upon what the defendant would obtain in the market for the given piece of land. If, however,

the defendants used the land, the ultimate fruits of the land (in this case the price of the fruits) would be the determinative factor.

13. In the full bench judgment of the Bombay High Court the

Court in the case of The Municipal Corporation of Gr. Mumbai & Ors. Vs. Dalamal Tower Premises Co-operative Soc. Ltd. 7 Anr. in Appeal no.801 of 2004 in WP No.2120 of 2004 the Court had to

consider how a property had to be valued for determining the rateable value; whether the market value or the standard rent of the tenanted property was to be accounted for. The Court held that in cases

whether standard rent was payable it may found the basis of determination as that would be the annual rent for which the land or building would reasonably be expected to be let from year to year. If, however, the standard rent was not fixed the reasonable rent would be determined by the municipal legislation without considering the rent control legislation. Hence it was held that the contractual rent

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paid by the tenant which the landlord was entitled to continue to receive without legal impediment would be the basis for

determination of the rateable value of the property as in such case the

landlord would be seen to be receiving such rent when the property was let from year to year. Hence the actual annual rent was the yardstick for such determination when the rent control legislation did

not govern the premises. The Court considered the number of precedents with regard to the property tax and the rent chargeable under various rent control legislation in various cities of India

including Ahmedabad, Delhi, Calcutta and Mumbai etc. The annual

rent was the basis unless there would be circumstances which affected the quantum of rent.

14. In this case the actual annual earning would be the determinative factor since the land has mango trees from which the

defendant would obtain the sale price upon ordinary diligence as held

in the case of Humayun (Supra).

15. Consequently though the law laid down in the judgment of

this Court in the case of Dalamal (Supra) specified the kind of rent to be considered for rateable value to be charged for the property, the analogy in the judgment would apply also for the determination of

royalty when the suit premises, a tenanted premises, was a leased land capable of income. The rent which has been fixed a decade ago at the time of the execution of the lease deed would, therefore, not alone represent the valuation of the property (even assuming that lease deed was genuinely and validly executed which fact would only be seen in the trial).

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16. Taking into account aforesaid judgments and more specially the judgment of the Supreme Court in the case of Super Max

(Supra) where the Supreme Court considered contractual rent and

even the amount higher than the contractual rent as payable and the case of the Bombay High Court which considered the receipts of the defendant which could be received from the land with ordinary

diligence, the valuation of the land must be, not as per the valuation report, not as per rent fixed in the lease deed even with 10% increase each decade, but the income which the defendant would receive from

the suit land with ordinary diligence i.e. what the user of the property

would mean to the defendant. Hence the feasible, reasonable and suitable mode of determination the amount of royalty would be the

proceeds of the fruits of the mango trees upon the yield of the trees each year.

17. It must also be remembered that the suit was filed in 1992.

It is now 22 years old. It is ripe for trial. Neither party has sought to prosecute or defend the suit itself. The defendant Nos.4 and 5 are the real contesting defendants. Their written statement is filed.

18. Hence issues are required to be framed and the evidence is required to be recorded expeditiously. Pending the conclusion of the

trial the defendants cannot be allowed to profiteer from the suit land and appropriate yield of the mango trees.

19. Hence following order :

1. The valuation of the suit land and the royalty fixed by the Court

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Receiver upon such valuation are set aside. The valuation of the suit land shall be the returns of the mango crop which

defendant Nos.4 and 5 would receive from the suit land.

2. The Court Receiver shall inspect suit land and make an account of the number of trees on the suit land.

3. The Court Receiver may appoint security guards upon the

plaintiff putting the Court Receiver in funds for that purpose.

4. The Court Receiver shall collect the mango crop in the forthcoming mango seasons pending the trial.

5. The Court Receiver shall sell the mango crop either by public

auction or by private treaty to the purchaser who offers the highest consolidated amount for collecting the mango crop.

6. The Court Receiver shall receive the consideration of the sale and invest the same in any Nationalised Bank at the end of each mango season until the trial is over.

7. The trial shall proceed expeditiously.

8. Suit is adjourned to 15th January, 2015 for framing issues.

( ROSHAN DALVI, J. )