Calcutta High Court
Acumen (J) Marketing Private ... vs Hooghly Investments Limited on 6 May, 2022
ODC-11
ORDER SHEET
IA NO. GA/1/2022
In
AP/208/2022
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
(Commercial Division)
ACUMEN (J) MARKETING PRIVATE LIMITED
Vs
HOOGHLY INVESTMENTS LIMITED
BEFORE:
The Hon'ble JUSTICE SHEKHAR B. SARAF
Date: 6th May, 2022
Appearance:
Mr. Suman Dutt, Adv.
Mr. Shuvasish Sengupta, Adv.
Ms. Susrea Mitra, Adv.
Mr. Suvradal Chowdhury, Adv.
Mr. Souma Bhattacharya, Adv.
Mr. Sabyasachi Chowdhury, Adv.
Mr. Rajarshi Dutta, Adv.
Ms. Mudrika Khaitan, Adv.
1. The Court: I have heard the Counsel appearing on behalf of the parties.
This is an application filed under Section 36 of the Arbitration and
Conciliation Act, 1996 in relation to an award passed on December 22,
2021. The relevant portion of the award is delineated below:-
"Therefore, this Tribunal is of the opinion that the reasonable market rate
of the premises should not be less than Rs.300/- per sq. ft. per month
inclusive of the maintenance charges and the facility service charges.
Now, taking into account that 7% of the total license fees be considered
2
as the amount for occupation charges, then the amount which the
respondent is liable to pay on account of mesne profit is Rs.21/- per sq.
ft. per month.
Hence, this Tribunal is of the view that the claimant is entitled to get
mesne profit on and from September, 2017 till the delivery of possession
@ Rs.21/- per sq. ft. per month as occupation charges.
Accordingly, this Tribunal declares an Award in favour of the claimant to
the effect that the claimant is entitled to get vacant, khas and peaceful
possession of the commercial space, being Unit No.01 containing super
built-up area of 690 sq.ft., chargeable area 1047 sq. ft. Accordingly, the
respondent is directed to handover peaceful possession of the aforesaid
Unit No.01 in favour of the claimant within two months from the date of
this Award. In default, the claimant would be at liberty to put the Award
into execution. This Tribunal also grants an award of mesne profit in
favour of the claimant for a sum of Rs.11,43,324/-, subject to
adjustment of the amount which the claimant already received from the
respondent from the months of September, 2017 till December, 2021 on
account of rent and/or occupation charges."
2. Mr. Suman Dutt, Counsel appearing for the petitioner/tenant, argues that
for staying the award the petitioner/tenant is willing to deposit the
differential amount on account of the mesne profits as per the directions
given by the arbitral tribunal. However, the question of acceptable rate of
occupation charges cannot be decided by the court in this stay application
as Section 34 application is pending. Hence, he has suggested that the
petitioner will continue to pay the occupational charges at the rate of
Rs.15/- per sq. ft. to the award-holder and deposit the balance
occupational charges @ Rs.6/- per sq. ft. with the Registrar, Original Side,
the same being subject to the outcome of the Section 34 application. He
submits that granting an order for regular payment of occupational
charges @ Rs. 21 to the award holder at this stage would amount to
execution of the award which is outside the scope of the present
application. Further, it is submitted that in the event the Section 34
application of the tenant is allowed and the award is set aside, the status
quo would be restored and the tenant would be entitled to get back all the
amounts paid by it in excess of the contractual rent. That being the case,
the amount fixed by the court over and above the contractual monthly
rent, ordinarily, should not be directed to be paid to the owner during the
pendency of Section 34 application. He places reliance on State of
Maharashtra and Another -v- Super Max International Private
Limited and Others reported in (2009) 9 SCC 772 to bolster the above
arguments.
3. Mr. Sabyasachi Chowdhury, Counsel appearing for the respondent/owner,
argues that the respondent/owner cannot be deprived of the fruits of the
award and the court while exercising the jurisdiction under Order 41 Rule
5 must not postpone the execution of the order for eviction by granting
stay without putting the tenant on terms. Further, he submits that after
an award for possession has been passed and execution of the same is
delayed, it deprives the award holder of the fruits of award. Hence, it is
essential for the court to pass relevant orders for grant of the mesne
profits equal to the prevailing market rate to allow the tenant to occupy
the property. He places reliance on Atma Ram Properties (P) Ltd. -v-
Federal Motors (P) Ltd reported in (2005) 1 SCC 705 to buttress the
above arguments.
4. In Atma Ram Properties (P) Ltd. (supra), the court held that the tenant
is liable to pay mesne profit or compensation for use and occupation of the
premises as per the prevalent market rate and the landlord is not bound
by the contractual rate of rent after the decree is passed. Relevant
paragraph of the judgment is delineated below:
"19. (1).....
(2).........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)......"
5. In Super Max International (supra), after taking into consideration the
ratio in Atma Ram Properties (P) Ltd. (supra) it was held by the court that
during the pendency of an appeal/revision the court should not ordinarily
grant payment of the amount over and above the contractual rent to the
landlord. Relevant paragraph of the judgment is delineated below:
"79. Before concluding the decision one more question needs to be
addressed: what would be the position if the tenant's appeal/revision is
allowed and the eviction decree is set aside? In that event, naturally, the
status quo ante would be restored and the tenant would be entitled to get
back all the amounts that he was made to pay in excess of the contractual
rent. That being the position, 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 upon the result of the case."
6. Upon considering all the materials on record, I am of the view that since
the petitioner/tenant is willing to provide security for the due performance
of the award as it may ultimately be binding upon him, the arbitration
award may be stayed subject to the following conditions:-
a) The award-debtor has to pay rent at the rate of Rs.21 per sq.ft. per
month to the award-holder as occupational charges as provided in
paragraph 7 & 8 below;
b) The difference of mesne profit that comes to around Rs.4,40,000/-
be deposited with the Registrar, Original Side. The Registrar, Original
Side is directed to keep this money in an interest bearing fixed
deposit which is to be kept renewed till disposal of the Section 34
application.
7. I am inclined to accept the suggestion made by Mr. Dutt that he will
continue to pay Rs.15/- per sq. ft. to the award-holder and deposit the
balance Rs.6/- with the Registrar, Original Side as it is not in conflict with
the rights of both parties. The interest of the respondent/owner is secured
as per the award passed by the Tribunal and no prejudice will be caused
to it till the time Section 34 application is decided by the Court.
8. In light of the above, I am of the view that the balance Rs.6/- should be
paid to the Registrar, Original Side while Rs.15/- is to be paid to the
award holder.
9. With the above directions GA/1/2022 in AP/208/2022 is disposed of.
10. Urgent certified copies of the order, if applied for, may be supplied to the
parties.
(SHEKHAR B. SARAF, J.)
R.Bhar
