State Bank Of Bikaner And Jaipur vs I.S. Ratta And Ors.
2005 Latest Caselaw 829 Del

JUDGMENT

Mukundakam Sharma, J.

1. The present appeal has been preferred by the appellant bank as against the judgment and decree dated 28th January, 1997 passed by the Addl. District Judge, Delhi in Suit No. 6/89. The appellant was a tenant under the respondents in respect of flat No. 3, First Floor along with Mezzanine floor, located at Barakhamba Road, New Delhi(for short the 'flat') having approximate area of 1443 sq. ft.

2. The facts in brief are that the suit premises, namely, the flat in question was leased out in favor of the appellant by the respondents through a registered lease deed dated 28th October, 1975 for a period of seven years commencing from 1st October, 1975. The said lease deed contained a renewal clause to the following effect:

"To hold the demised premises up to the bank/for the term of seven years to be computed from 1st day of October One Thousand Nine Hundred and Seventy Five with option to the lessee of renewing the lease of the demised premises for a further period of five years subject to the condition hereinafter contained."

3. Pursuant to the aforesaid renewal clause, the bank exercised its option by writing a letter dated 24th June, 1982 for renewing the lease for a further period of five years on the same terms and conditions. The aforesaid renewal was for five years from 1st October, 1982 to 30th September 1987. After the expiry of the aforesaid period of lease, the respondent herein did not accept any amount towards rent whereupon the bank, the appellant herein started depositing the amount of rent in a joint account of the respondents maintained by them with the Chandigarh branch of the bank. According to the bank, in view of such deposit of the rent in the joint bank account of the respondents, the lease stood automatically extended for a further period of five years up to 30th September, 1992 and that due to the aforesaid position, the notice dated 10th December, 1988, terminating the tenancy also stood waived.

4. In view of the aforesaid lis between the parties, the respondents instituted a suit in the Court of Addl. District Judge, Delhi, which was registered as Suit No. 6/89. In the aforesaid suit, the carpet area of the suit property was mentioned as 1443 sq. ft.. In the said suit, two preliminary issues were framed to the following effect:

"a. Whether the suit is or is not maintainable in view of the amendment of Delhi Rent Control Act/onus on parties?

b. Whether the suit is not properly valued for the purposes of Court Fee and jurisdiction is beyond the pecuniary jurisdiction of this Court?OPD"

5. By order dated 27th October, 1990, the aforesaid two issues were decided against the appellant herein. The parties thereafter were taken to trial on the following issues:

" i. Is there no valid termination of tenancy and the suit is not maintainable? OPD

ii. Whether the plaintiff has consented for renewal of lease for 5 years with effect from 1.10.87? If so, to what effect? OPD.

iii. What is the effect of payment of rent by the defendants at the rate of Rs. 5572/- from 1st October, 1982 to 31st December, 1988? OPD.

iv. Whether plaintiffs No. 2 to 7 are not the legal heirs of deceased Natha Singh? OPD.

v. What is the effect of non-termination of tenancy by plaintiff No. 8 to 10? OPD.

vi. If issue No. 1 is proved against the defendants, are the plaintiffs entitled to any damages? If so, at what rate and for what period? OPP.

vii. Are the plaintiffs entitled for possession? OPP.

viii. Relief."

6. The trial court in the judgment and decree dated 8th July, 1992 passed in Suit No. 6/89 held that the period of lease expired on 30th September, 1987. Possession of the bank thereafter was held to be as a tenant holding over from month to month. The trial court also held that the tenancy stood validly determined by service of notice dated 10th December, 1988. Payment of rent by the bank for the period from 1st October, 1987 to 31st December, 1988 was held as not amounting to waiver of notice of the plaintiff consenting for renewal of lease for a further period of five years with effect from 1st October, 1987. Consequently the plaintiffs(respondents herein) were held entitled to a decree for possession of the premises, arrears of rent and mese profits. The suit accordingly was decreed in the aforesaid terms for possession, arrears of rent up to the date of termination of tenancy and mesne profits @ Rs. 57,720/- per month from 1st January, 1989 to the date of decree and from the date of the decree till the date of delivery of possession @ Rs,57,720/- plus 25% i.e., Rs. 72,150/- per month. On the amount of mesne profits, interest was allowed @ 16.5% p.a. till realisation. As against the aforesaid judgment and decree, the aforesaid RFA being RFA No. 274/92 was filed at the behest of the bank/appellant whereas the respondents herein filed an appeal against the quantum of mesne profits. The said appeal was registered as RFA No. 275/93 praying for enhancement in the amount of mesne profits.

7. During the pendency of the aforesaid appeals in this Court, amendment was sought for by the plaintiffs to the plaint as regards the claim for mesne profits to the effect that in the event of prevalent market rent and interest as on 1st January 1989 being found higher by the Court, they be held to be entitled to higher mesne profits, higher rate of interest and also that they are entitled to 20% increase p.a. on the mesne profits as found on 1st January 1989 till date of delivery of possession. Both the aforesaid appeals were listed for hearing before a Division Bench of this Court. The Division Bench, after hearing the counsel appearing for the parties held that there was no question of extension of further period of lease by five years of a fresh lease having come into force after expiry of the period of lease on 30th September, 1987. It was also held that even assuming that there has been payment of rent as alleged by the bank to the respondents for the period from 1st October, 1987 to 31st December, 1988 and its acceptance by the respondents/plaintiffs, the lease period would not stand automatically renewed as lease is a bilateral agreement between the parties and in absence of any registered instrument as is envisaged under Section 107 of the Transfer of Property Act, (for short 'the Act'), there is no question of lease coming into being for a period of five years. Consequently it was held that the lease did not stand renewed after 30th September, 1987 and, therefore, the possession of the bank on and after 1st October, 1987 was held to be of a tenant holding over from month to month which tenancy was terminable under Section 106 of the said Act by 15 days notice. The notice which was served by the respondents on the appellant bank on 10th December, 1988 was found to be validly issued and served on the bank giving 15 days clear notice, terminating the tenancy by 31st December, 1988.

8. In view of the aforesaid position and also in view of the fact that the rent of the premises was more than Rs. 3,500/- per month, the decree passed by the trial court for possession was upheld. So far as the decree with regard to mesne profits is concerned, it was held that the judgment and decree of the trial court in so far as it relates to the plaintiffs claim for possession and the decree granted to the plaintiffs for arrears of rent and mesne profits from 1st January, 1989 to the date of delivery of possession deserved to be maintained. Having decided thus, the next question that was left to be decided by the Division Bench of this Court was the issue of fixation of quantum of mesne profits for the period from the date of decree till the delivery of possession. It was held that the mesne profits from the date of decree till the date of possession would have to be ascertained and, therefore, the application of the plaintiff for amendment of the plaint was allowed and the trial court was directed to hold an enquiry and to ascertain the amount of mesne profits payable to the plaintiffs from the date of decree till the date of delivery of possession. Consequent upon the aforesaid judgment and decree, the trial court held an enquiry and thereafter passed the impugned judgment and decree dated 28th January, 1997 whereby the trial court awarded mesne profits in favor of the plaintiffs and against the defendants at the following rate:

"Period Rate per sq.ft super built area per month 8.7.92 to 31.8.93 Rs. 81.08 1.9.93 to 30.4.94 Rs. 95.26 1.5.94 to 31.10.94 Rs. 108.25 1.11.94 to 28.2.95 Rs. 155.93 1.3.95 to 31.10.96 Rs. 218.31 1.11.96 till recovery of the possession Rs. 308.78"

The trial court granted payment of interest @ 16.5% p.a. on the aforesaid mesne profits and gave an adjustment of Rs. 57,720/- per month from 8 July 1992 to 31 December 1996 which was the amount paid by the appellant to the respondents on account of the mesne profits.

9. Being aggrieved by the aforesaid judgment and decree, the present appeal was preferred in this Court. While admitting the appeal, an interim order was passed by this Court that out of the money deposited in the trial court, the respondents would be permitted to withdraw the decretal amount for the period up to 31st October, 1994 at the rate as adjudged by the trial court and for the remaining period only to the extent of the amount calculated @ Rs. 130.43p. per sq.ft. per month on the respondents furnishing a security for restitution to the satisfaction of the learned trial court. It was also ordered in the said order dated 20th February, 1997 that the balance amount, i.e., in excess of the rate of Rs. 130.43p. per sq.ft. per month calculated for the period from 1st November, 1994 onwards should, however, be retained in deposit till further orders. However, subsequent thereto an order was passed on 27th February, 1997 on the basis of the agreement between the parties thereto, modifying the order dated 20th February, 1997 whereunder an amount of Rs. 1 crore was paid to the respondents on furnishing security for restitution and Rs. 15 lakhs were deposited as TDS out of the total amount of Rs. 1.60 crores which was admittedly due and payable in terms of the decree. Another amount of Rs. 40 lakhs was directed to be kept in a fixed deposit account which was kept in the trial court and a further amount of Rs. 5 lakhs was kept for deposit as TDS for the said amount. Therefore, out of the total dues of Rs. 1.60 crores in terms of the decree, Rs. 1.15 crores were paid and the balance amount of Rs. 45 lakhs, namely, Rs. 40 lakhs lying in the trial court in a fixed deposit and Rs. 5 lakhs deposited as TDS is available.

10. The counsel appearing for the bank during the course of hearing submitted before us that the decree passed by the trial court awarding mesne profits at various rates for an increased area of 1876 sq.ft. on super built up area instead of 1443 sq.ft, which was the carpet area leased out to the appellant under the lease deed was illegal and without jurisdiction. It was also submitted by him that the rent was enhanced from Rs. 81.08 per sq.ft. to Rs. 308.78 per sq.ft. within a period of five years which was also without jurisdiction particularly in view of own admission of the respondents in the proceeding itself. It was also submitted by him that no interest on damages is payable and, therefore, award of interest @ 16.5% p.a. by the trial court on the mesne profits payable was without jurisdiction and, therefore, is required to be set aside. We have also heard Mr. Chandhiok, learned Senior counsel appearing for the respondents as also Mr. Ratta, respondent appearing in person who also made his submissions. We have also perused the connected records in order to appreciate the contentions raised before us. In the light of the same we propose to deal with the three issues which are specifically raised before us.

11. We first proceed to deal with the issue with regard to area of the leased property. What was leased out by the respondents to the appellant was a flat covering a carpet area of 1443 sq.ft. The lease deed specifically mentioned the area as the lease area. The judgment and decree which was passed by this Court in RFA Nos. 274/92 and 275/93 on 21st November, 1995 specifically held that the suit premises had approximately an area of 1443 sq.ft. The only issue which was remitted back by the High Court to the trial court was the quantum of mesne profits to be fixed from the date of the decree till the date of delivery of possession. No other issue including the area of the suit property was remanded back by this Court to the trial court.

The carpet area which was under the occupation of the appellant under the lease was an area of 1443 sq.ft. Therefore, there was no occasion and scope for the learned trial court to travel beyond the pleadings of the parties and the order of remand of this Court for awarding mesne profits for the aforesaid period fixed by this Court i.e., from the date of decree till the date of delivery of possession for an increased area terming the same as super area. In this connection, reference is also to be made to the application which was filed by the respondents and registered as CM 489/94 arising out of RFA 274/92. In this application, the respondents sought for payment of mesne profit at different rates for different period but for an area of the suit property admittedly measuring 1443 sq ft. Therefore, they cannot now get out of their own admission and ask for mesne profit for an increased area of suit property allegedly measuring 1876 sq. ft. That would simply be not permissible and held accordingly. The decree to the aforesaid extent passed by the trial court therefore, cannot be sustained and is set aside, holding that the respondents would be entitled to the mesne profits for an area of 1443 sq.ft. and not for an area of 1876 sq.ft. The decree passed by the learned trial court to the aforesaid extent is therefore, set aside and quashed.

12. We may now deal with the second contention of the learned counsel appearing for the appellant that there being an admission on the part of the respondents that the rate of rent/mesne profits for the premises should be at Rs. 130.43p. per sq. ft. per month as on 1st April 1994, and that the judgment, fixing the quantum of mesne profits by the learned trial court at a rate beyond the said admitted rate is illegal and without jurisdiction. In support of the said contention, our attention was drawn to the contents of CM No. 489/94 which was filed by the respondents in RFA No. 274/92 which was disposed of by this Court by judgment and decree dated 21 November 1995. We have considered the said submission and also carefully perused the averments made in the said application. The said application was filed on 17 March, 1994. Relevant part of the said application reads as follows:

"The value of actual rent of per sft as per renting of this building as per covered area(as converted from super area) and addition of benefit of interest on advances comes to per month:

Rs. P. Rs. P.

i) Rent per sft super area 88.00

ii) Rent as increased upon conversion of super area to covered area i.e., by adding 21% 18.48 106. 48

iii) Per sft benefit of interest in advance 106.48x8=851.84x16.5 100x12 = 11.71

After pro rata deduction it comes to be per sft. 8. 30 114.78

A copy of letter of M/s Caltex India Ltd., a letter of Brig. J.S. Phoolka mentioned above are enclosed.

That the tenant of above said premises on 6th Floor of Meridien Office tower, 8, Windsor Place, Janpath, New Delhi on expiry of earlier lease as detailed above through its letter dated 1.3.1994, has made an offer of Rs. 100/- per sft super area per month. A copy of this letter is enclosed. The offer has been accepted by the Lessers, an affidavit of Brig. J.S. Phoolka, one of the Lessers is enclosed.

As per this renting on the calculation detailed in para 5 above, the actual rent of per sft per month as on 30.4.94 will work out to be (114.78x100)/88 = Rs. 130.43p and the per annum will be (12x12x100)/8x88 = 20.45%.

That the Multi-storeyed building "NEW DELHI HOUSE" being near to Connaught Place is better located than the building detailed in paras 3 and 5 above, construction of all these buildings is similar and the rent of premises detailed in paras 3, 5, 6 above are market rent of suit premises.

That the market rent of suit premises as on 1.12.1992 per sft will work out to Rs. 98.30p, on 1.9.1993, Rs. 114.78 and on 1.4.94, Rs. 130.43p. per mensum.

.............

It is therefore prayed that:-

i) In the event of the defendant/appellant continuing in possession under orders of this Hon'ble court, then the defendant/appellant be directed to pay the prevalent market rent i.e. 98.30 per sft. w.e.f. 1.12.1992 to 31.6.1993, Rs. 114.78 per sft with effect from 1.9.93 to 31.3.1994 and Rs. 130.43 per sft per month w.e.f 1.4.1994 onward for an area measuring 1443 sft. Or the amount as may be deemed fit and proper by this Hon'ble Court.

ii) ....... ......... ......... .........

iii) ....... ......... ......... ........."

13. A close perusal of the said paragraph would clearly show that the respondents placed evidence before this Court as to how the rent/mesne profit is to be computed for the area under occupation of the appellant.

14. We have carefully perused the contents of the aforesaid application wherein the respondents have given evidence as to how rent from 1.12.92 to 1.4.94 and thereafter should be computed. It was specifically averred after giving detailed calculations for working out the said rent that a direction should be issued to the appellant to pay the prevalent market rent at Rs. 98.30p per sq.ft., from 1.12.1992 to 31.8.1993, Rs. 114.78p. per sq.ft. from 1.9.93 to 31.3.1994 and Rs. 130.43p per sq.ft. from (sic).4.1994 onwards for an area measuring 1443 sq.ft., or a rent as may be deemed fit and proper by this Court. The aforesaid calculation is based on the details which are given in para 5 of the application. The said application is signed by the respondent No. 1, who is the general attorney and also counsel of the remaining respondents. Possession of the property was admittedly handed over to the respondents on 31st March, 1997. It is in the light of the aforesaid computation and evidence submitted by the respondents themselves before this court that the same should be considered as an admission on the part of the respondents regarding the rent and no amount beyond the same could be awarded in favor of the respondents as mesne profits. The learned trial court, however, did not consider the said admission while passing the impugned judgment and decree and instead considered the remaining evidence which was led by the parties after the order of remand and fixed the mesne profits on the following rate:

"Period Rate from 8.7.92 to 31.8.93 @Rs.81.08 per sq.ft., super built up area p.m. From 1.9.93 to 30.4.94 @ Rs. 95.26 per sq.ft. super built up area p.m. From 1.5.94 to 31.10.94 @ Rs. 108.25 per sq.ft., super built up area p.m. From 1.11.94 to 28.2.95 @ Rs. 155.93 per sq.ft. super built up area p.m. From 1.3.95 to 31.10.96 @ Rs. 218.31 per sq.ft., super built up area p.m. and from 1.11.96 till the @ Rs. 308.87 per recovery of possession sq.ft., super built up area p.m."

15. Having considered the nature of the statement made by the respondents themselves before this Court by giving calculations as to why and how the market rent should be assessed at the various rates given in the said application, the same has to be treated as an admission on the part of the respondents regarding the market rent/mesne profits. The judgment and decree, therefore, stands modified so far as the issue regarding fixation of quantum of mesne profits is concerned and we hold that the respondents shall be entitled to mesne profits @ Rs. 98.30p per sq.ft., per month from 1.12.92 to 31.8.93, @ Rs. 114.78p., per sq. ft., per month from 1.9.93 to 31.3.1994 and @ Rs. 130.43p., per sq.ft. per month from 1.4.94 to 31.12.94 for an area measuring 1443 sq.ft., and from 1.1.95 till the date of delivery of possession @ Rs. 200/- per sq.ft., per month. The aforesaid fixation of the quantum of mesne profits payable is based on the admission of the respondents as contained in the said application which was filed on 17th March, 1994, except in relation to the period 1.1.95 till the date of delivery of possession which we have fixed at Rs. 200/- per sq.ft., per month. We are conscious of the fact that this rate of Rs. 200/- per sq.ft., per months in excess of the rate of Rs. 130.43paise claimed by the respondents in their said application. Nevertheless we have done so for the reason that the application whereby Rs. 130.43p was claimed was filed on 17th March, 1994, whereas the mesne profits are required to be assessed till 31.3.1997 when the possession was handed over to the respondents. There is a wide gap between 17.3.1994 and 31.3.1997. We, therefore, feel that notwithstanding the admission of the respondents, this Court has to and is in fact duty bound to fix mesne profits which are just and reasonable taking into consideration the fact of ever increasing rate of rent in Delhi, of which we can take judicial notice. Hence while ascertaining and fixing the rate of rent for a particular premises there would always be some element of deduction. Therefore, we are of the view that the quantum that we have fixed is reasonable and appropriate in the facts of the present case. The decree stands modified to the aforesaid extent for the fixation of quantum of mesne profits accordingly.

16. Having decided the aforesaid question in the aforesaid manner, we proceed to deal with the next contention of counsel appearing for the appellant that the interest awarded by the learned trial court for the damages is unknown in law. We have given our anxious consideration to the aforesaid contention of counsel appearing for the appellant. The said contention is however, liable to be rejected straightaway in view of the settled position of law in that regard in the decision of the Supreme Court in Mahant Narayana Dasjee Varu and Ors. v. the Board of Trustees, The Tirumalai Tirupathi Devasthanam, reported in AIR 1965 SC 1231. The Supreme Court in the said decision held that Section 2(12) of the CPC has defined what 'mesne profits' is. It as also held in the said judgment that interest is an integral part of the mesne profits and, therefore, the same has to be allowed in the computation of mesne profits itself. The following paragraph from the judgment is relevant to be extracted which accordingly stands quoted herein:

"The last of the points urged was that the learned Judges erred in allowing interest up to the date of realisation on the aggregate sum made up of the principal and interest up to the date of the decree, instead of only on the principal sum ascertained as mesne profits. For the purpose of understanding this point it is necessary to explain how interest has been calculated by the learned Judges. Under Section 2(12) of the Civil Procedure Code which contains the definition of "mesne profits", interest is an integral part of mesne profits and has, therefore, to be allowed in the computation of mesne profits itself. That proceeds on the theory that the person in wrong possession appropriating income from the property himself gets the benefit of the interest on such income. In the present case the Devasthanam was entitled to possession from aqnd after June 7, 1933 i.e., when the Act came into force and the Devasthanam Committee was appointed. The Mahant having wrongfully resisted the claim of the Devasthanam to possession without surrendering the property, was admittedly bound to pay mesne profits. This, it may be stated, is not disputed. The question raised are, however, two: (1) when is the aggregation of the principal amount of the mesne profits and the interest thereon to be made for the purpose of the total carrying further interest?, (2) What is the rate of interest to be charged. The learned trial Judge allowed interest at 6 per cent for the calculation of interest which is part of mesne profits. Having calculated mesne profits on this basis he aggregated the amount of mesne profits, i.e., income from the several items of property plus the interest on it up to the date of the plaint, i.e., January 10, 1946. On the total sum so ascertained he decreed interest at 6 per cent till the date of his decree i.e., March 28, 1952. He passed a decree for this sum with further interest at 6 per cent till the date of realisation."

17. The aforesaid issue is no longer res integra that interest on mesne profits could be paid. The next question, therefore, would be as to what would be the appropriate rate of interest. The learned trial court has awarded 16.5% p.a., interest on the rent. In the aforesaid case decided by the Supreme Court 6% interest was held to be a reasonable interest. In the said case it was held that:

"In any event, if the trial court in its discretion awarded interest at 6 per cent, and that is admittedly not per se an unreasonable rate, there was no compelling equity in the Mahant to justify interference with that discretion."

18. Considering the facts and circumstances of the case we consider that direction to pay interest @ 16.5% p.a was on the higher side. We, in the facts and circumstances of the case deem it proper to fix the rate of interest payable by the appellant to the respondents towards the arrears of mesne profits from the date of decree till the date of possession at 12% p.a. Ordered accordingly. The amount paid in excess shall be returned by the respondents to the appellant, failing which security furnished for restitution shall be enforced and the amount which is lying with the trial court amounting to Rs. 40 lakhs and TDS amount of Rs. 5 lakhs shall be returned to the appellant.

The appeal stands disposed of in terms of the aforesaid order.