Saraswati Construction Company vs Indian Overseas Bank And Anr.
2006 Latest Caselaw 1552 Del

JUDGMENT

Hima Kohli, J.

1. The present appeal has arisen out of the judgment and decree dated 7th September, 1998 passed by the learned Single Judge in a suit filed by the appellant as a plaintiff praying inter alia for a decree for possession of a premises known as B1/26-27, Community Centre, Janakpuri, New Delhi comprising of 4 floors, namely, basement, ground floor, first floor and second floor along with a decree for recovery of mesne profit at the rate of Rs. 12 per sq. ft. per month for each floor w.e.f. 1st February, 1990.

2. By the impugned judgment and decree, the respondent bank was directed to hand over vacant and peaceful possession of the suit premises to the appellant by 31st July, 1999 and also to pay the appellant mesne profit @ Rs. 10 per sq. ft. per month w.e.f. 1st February, 1990 till the delivery of the possession of the suit premises along with costs payable to the appellant.

3. Aggrieved by the aforementioned judgment and decree, the appellant has preferred the present appeal in which the appellant has claimed that the learned Single Judge ought to have awarded some mesne profit @ Rs. 12 per sq. ft. per month as the same was the prevailing rent in the same building and that no interest was awarded by the learned Single Judge on the mesne profit to which the appellant was entitled. The respondent has also filed cross- objections in the present appeal stating inter alia that the mesne profit awarded by the learned Single Judge @ Rs. 10 per sq. ft. per month was highly excessive and that the appellant was entitled to enhancement of 10% of the agreed rent as per the lease deed on the completion of every 5 years.

4. Very briefly, the admitted facts, as culled out from the impugned judgment as also the records before this Court, are that the suit premises was let out by the appellant to the respondent bank w.e.f. 1st March, 1981 at the monthly rent of Rs. 23,580/- per month, subsequently, revised to Rs. 29,322/- per month. Vide notice dated 2nd May, 1989, and lastly vide notice dated 10th January, 1990, the appellant called upon the respondent bank to hand over vacant and peaceful possession of the suit premises to the appellant failing which it was stated that the respondent/defendant shall be liable to pay damages/mesne profit at the current market rate prevailing in the locality. As respondent/defendant bank did not vacate the suit premises, the appellant/plaintiff filed the present suit in question in March, 1990. The suit was contested by the respondent bank on various grounds. After pleadings were completed, vide order dated 21.7.1995, seven issues were framed by the learned Single Judge and the case was put up for recording of evidence.

5. It is pertinent to note that subsequently, the respondent/defendant moved an application in the suit proceedings, wherein they expressed their willingness to hand over vacant and peaceful possession of the suit premises to the appellant/plaintiff. As a result, upon an undertaking filed by the respondent/defendant, they were granted time up to 31st July, 1999 to vacate the suit premises. It also transpires from the records, as available on the Court file, that the respondent/defendant filed an application in the suit proceedings being IA 6967/1999 seeking further time to vacate the suit premises, which was granted by the learned Single Judge and at that time, the respondent tendered the decretal amount of Rs. 95,07,192.05 paisa to the appellant.

6. In this view of the matter, the issues No. 1, 2, 3, 4, and 5 did not survive for determination and thus only issue No. 6, as reproduced herein below, has been decided by the learned Single Judge:

6. To what amount, if any, the plaintiff is entitled to mesne profit/damages/rent and for which period and at what rate? OPP

7. We have carefully perused the impugned judgment and have gone through the pleadings between the parties, the documents filed and the evidence recorded by the parties in respect of the aforementioned issue. The appellant/plaintiff has claimed mesne profit at the rate of Rs. 12 per sq. ft., per month w.e.f. 1st February, 1990. In the suit instituted by the appellant in the year 1990, it has been claimed by it that the market rate of rent of similar/near similar nature of properties in the locality was not less than Rs. 12 per sq. ft., per month and that the respondents/defendants were liable to pay damages/mesne profit for their unauthorized and illegal use of premises at such a rate w.e.f. 1st February, 1990 till the date of restoration of the possession of the suit premises.

8. In support of its claim, the plaintiff examined two witnesses, namely, PW-1 Shri Chunni Lal, the Administrative Officer of Life Insurance Corporation of India, which was tenant in respect of the 3rd and 4th floors of the suit premises, and PW-2 Shri Lalit Mohan Madan, the sole proprietor of plaintiff firm. The respondent/defendant produced only one witness, namely, DW- 1 Shri Golak Chandra Mahapatra, Senior Manager of the respondent Bank.

9. The appellant placed heavy reliance on a letter dated 15.9.1992 (Ex.PW-1/1) issued by the Life Insurance Corporation of India (LIC) to the appellant wherein it was stated that the LIC has agreed to take the 3rd and 4th floors of the suit premises on a lump sum of Rs. 39,000/- per month exclusive of all taxes subject to the terms and conditions as contained in the said letter. PW-1 has stated in his examination-in-chief that the LIC had taken on rent the 3rd and 4th floor of the suit premises on 15th September, 1992 at the rate of Rs. 39,000/- per month for both the floors in terms of Ex.PW1/1. In his cross- examination by the respondent/defendant, he stated that he could not specify the per sq. ft. rate of the rent as the said information was not readily available with him. He also stated that he had no knowledge about the prevailing rate of rent in the area in September, 1992.

10. In his examination-in-chief, PW-2 reiterated the facts of the case, as stated in the plaint and in respect of the prevailing market rate of rent at the time of the institution of the suit, he deposed that the prevailing market rate of rent in respect of the basement, ground floor and upper floor prevailing in the area varied from @ Rs. 10 to 15 per sq. ft. per month. He also testified that the average rate of rent for commercial buildings in the area was about Rs. 30 per sq. ft. per month. He, however, did not produce any other witness in support of his claim that the rate of rent in the area in question was at least @ Rs. 12 per sq. ft. per month; nor were any other lease deeds of properties in the vicinity or other documentary evidence produced by him to suggest the prevailing market rate of rent in the area. In his cross- examination, the appellant/plaintiff had denied the suggestion, as put to him by the respondent/defendant, that the rates of rent specified by him in his examination-in-chief were wrong.

11. In his examination-in-chief, DW-1, the Senior Manager of the respondent/defendant bank, deposed to the effect that in the year 1990, the prevailing market rent of similar premises was ranging between Rs. 1.50 paisa to Rs. 3.50 paisa per sq. ft. per month and that in 1996 when his statement was recorded, the rate of rent in the neighbouring area was between Rs. 5 to Rs. 7 per sq. ft. per month. However, the respondent/ defendant also failed to prove, as per law, the copies of the documents/lease deeds, filed by it in support of its case, of the relevant period in the neighborhood to substantiate its claim with regard to the prevailing market rate of rent of the similar premises.

12. In fact, DW-1 stated in his cross-examination that he could not even say if the rate of rent was Rs. 10 per sq. ft. per month since 1992. Only a bald statement was made by DW-1 denying that the prevailing market rate of rent of similar premises for the relevant year was Rs. 16 to Rs. 17 per sq. ft. per month.

13. In view of the aforementioned facts, the learned Single Judge has observed that there was nothing on the record to show or suggest that the prevailing market rate of rent of the buildings let out for commercial purposes was less than @ Rs. 12 per sq. ft. per month and that in view of the fact that the plaintiff's witnesses had been left unchallenged by the defendant bank on the point of the prevailing market rate of rent of the building in question, there was no ground to disbelieve their testimony with respect to their assessment of the prevailing market rate of rent of the building. Thus, it was concluded by the learned Single Judge that it was a fit case where the appellant/plaintiff be entitled to recover mesne profit at the rate of Rs. 10 per sq. ft. per month w.e.f. 1st February, 1990 till the date of delivery of possession of the suit premises.

14. On the question raised before us, as to what ought to have been the rate of mesne profits awarded by the learned Single Judge, we may start with the settled principle of law that a person/party who continues to occupy a premises despite termination of tenancy, is liable to pay mesne profits and damages at a rate which may be higher than the amount paid as agreed rent and it could also be at par with the prevalent market rent being fetched by a similarly situated premises in the area. In so far as quantification of the rate of rent is concerned, the court is required to hold an enquiry under the provisions of Order XX Rule 12 of the CPC and determine the mesne profits/damages and a decree in respect thereof may be passed thereafter. Thus, in terms of Sections 56 and 57 of the Indian Evidence Act 1872, judicial notice can be taken of the factum of increase of rent in a premises in Delhi, over a period of time, for the purposes of quantification of the rate of rent.

15. In a number of cases, this Court and the Supreme Court have taken judicial notice of matters including those pertaining to the increase of rent and have proceeded to award mesne profits/damages in favor of the landlord. Particularly relevant in this regard, are the following judgments:

1. Onkar Nath v. Delhi Administration AIR 1997 SC 1108.

2. Oswal v. V.K. Subbain and Ors.

3. Vinod Kumar v. Bakshi Sachdev 1995 (2) AD Delhi 304

4. S. Kumar v. J.R. Kathpalia 1999 RLR 114

5. The National Radio and Electronics Company Limited v. Motion Pictures Association 2005 VI AD (Delhi) 515

16. However, a finding can be arrived at only on the basis of the legal evidence adduced and the material placed on the record and proved as per law to establish the actual prevailing market rate at which premises have been let out over the period and a comparison of such similarly placed premises with the premises, subject matter of dispute.

17. The quantification of the rate of rent is dependant on many factors. As held by a Division Bench of this Hon'ble Court, in the case of National Radio and Electronics Company (supra), quantification of the rate at which the increase of rent has taken place requires finding to be arrived at on the basis of legal evidence and material in hand. Para 34 of the aforementioned judgment reproduced herein below, is relevant for the present purpose:

34. Judicial notice is taken of only such facts of which there can be only one view. In the light of the aforesaid position in law, there can be no manner of doubt that so far as the increase of rent is concerned, judicial notice can be taken of a fact that over a certain period rents generally have arisen. However, so far as quantification of the rate at which the increase has actually taken place, a finding can be arrived at only on the basis of legal evidence and material establishing the actual rates at which properties have been let over the period and comparison of such properties with the property which is the subject matter of the list. Rents may very based on location of properties, nature of construction, period of construction, purpose/user for which the premises are let, variation between demand for tenanted premises and availability of premises and even factors relating to the position of the economy. Therefore, while a learned trial judge may be justified in taking judicial notice of the fact that rents have risen over a certain period of time in the area in question, it would be incumbent upon a person laying a claim of entitlement to mesne profits to prove the same by cogent and reliable evidence in accordance with law.

As has been noticed in the judicial pronouncements noticed hereinabove, the evidence may include documentary evidence relating tenancies of properties in the area which can be summoned from the office of the Sub-Registrar or by examination of property dealers, oral testimony of the parties to the litigation and persons in the trade of real estate, other property owners.

18. In the instant case, we are unable to agree with the submission of the learned Counsel for the appellant that the learned Single Judge erroneously overlooked the letter dated 15.9.1992 (Ex.DW.1/1) which, as per his submission, clearly established that the market rate of rent of the suit premises at the relevant time was at least at the rate of Rs. 12 per sq. ft. per month and that the learned Single Judge erred in granting mesne profit at the rate of Rs. 10 per sq. ft. per month.

19. A bare perusal of the aforesaid letter dated 15.9.1992, issued by the LIC to the appellant/plaintiff, reflects that the learned Single Judge could not have placed complete reliance on the said document inasmuch as the same was extremely ambiguous. It neither contained the specific rate fixed on per sq. ft. basis per month, nor was it clarified as to what was the specific area for which the said rate was fixed. In fact, it is apparent from the letter that except for stating that the LIC was agreeable to take on rent the 3rd and 4th floors of the suit premises on a lump sum rent of Rs. 39,000/- per month, exclusive of all taxes, nothing further was clarified by way of specific details. There is nothing on record to establish as to what were the prevalent taxes payable at the relevant time in respect of the premises proposed to be taken on rent, what was the sq. ft. area comprising of the 3rd and 4th floors and what should have been the exact rent on the basis of per sq. ft. area per annum, exclusive of taxes, etc. In fact, the evidence adduced by the witnesses produced by the appellant also failed to throw any light on the point, thus leaving the learned Single Judge to make his own deductions. In these circumstances, the learned Single Judge rightly did not place complete reliance on the said document to grant mesne profits/damages to the appellant/plaintiff at the rate of @ Rs.12 per sq. ft. per month, as claimed and scaled the figure down to Rs. 10/- per sq. ft. per month.

20. At the same time, we do not find any force in the cross objections of the respondent bank that the above rate of rent of Rs. 10/- per sq. ft., per month was highly excessive, as the bank miserably failed to discharge the onus that had shifted upon it to establish that the rate of rent of similar premises in the area was ranging between Rs. 1.50 paisa to Rs. 3.50 paisa per sq. ft., per month, in the year 1990 and between Rs. 5 to Rs. 7 per sq. ft., per month, in the year 1996. To be able to establish to the contrary, the respondent bank was required to prove as per law, the copies of lease deeds filed by it on the record, by summoning documentary evidence from the office of the Sub-Registrar on by producing witnesses who were property owners or agents or in the business of real estate, and by other oral testimony available to it. This burden of proof was not discharged by the respondent bank who produced only one witness and even failed to place on record and prove the purported lease deed under which the respondent claimed that the appellant was entitled to receive enhancement of 10% of the agreed rent on the completion of every 5 years. Thus, there was no material placed on the record by the respondent/defendant to rebut the evidence adduced by the appellant/plaintiff and establish its claim. We, therefore, hold that the learned Single Judge was right in giving a finding that the appellant was entitled to mesne profits at the rate of Rs. 10 per sq.ft., per month w.e.f. 1st September, 1990 till the delivery of possession of the suit premises along with costs.

21. However, in so far as the second claim of the appellant to the effect that he was entitled to award of interest on the mesne profit is concerned, we may advert to the provisions of Section 2(12) of the CPC which contains the definition of mesne profit. The same is reproduced herein below:

2(12) mesne profits of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received there from, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession.

22. The issue with regard to grant of interest for the damages awarded, is squarely covered by the aforesaid provision and is the settled position of law in this regard, as stated in a decision of the Supreme Court in Mahant Narayana Dasjee Varu and Ors. v. Board of Trustees, The Tirumalai Tirupathi Devasthanam and Ors. . The aforesaid observations have also been reiterated in a recent judgment delivered by a Division Bench of this Court, of which, one of us (Dr. Mukundakam Sharma. J.), has delivered the judgment, in State Bank of Bikaner and Jaipur v. I.S. Ratta and Ors. wherein relying on the following paragraph from the aforesaid judgment rendered by the Supreme Court, it has been reiterated that interest is an integral part of the mesne profit and that the same has to be allowed in computation of mesne profits itself:

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.

23. In this view of the matter, we are of the opinion that in the instant case, the appellant/plaintiff is certainly entitled to interest on mesne profit. The next question, therefore, would be as to what would be the appropriate rate of interest. Considering the facts and circumstances of the case and the current rate of interest as offered by banks, we deem it appropriate to fix the rate of interest payable by the respondent to the appellant towards arrears of mesne profits, from the date of institution of the suit till the date of payment at 9% per annum.

24. We, therefore, modify the judgment and decree to the extent that the appellant is entitled to receive from the respondent, interest @ 9% p.a. on the mesne profit from the date of institution of the suit till the date of payment. We, however, maintain the impugned judgment with respect to the rate of mesne profits fixed by the learned Single Judge, namely, Rs. 10 per sq. ft., per month.

25. The appeal filed by the appellant stands disposed of in terms of the above. The cross objections filed by the respondent bank stand rejected. Parties are left to bear their own costs in the appeal.