M/S. Niader Mal Amar Nath & Ors. vs Rukmani Devi Jaipuria Charitable ...
2009 Latest Caselaw 3038 Del

*                 IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                                   Reserved on : 10.07.2009
%                                                             Date of decision: 07.08.2009


+                       CM Nos. 7600 of 2005 & 15953 of 2008

                                                      in

                                    RC.S.A. No.30 of 1998


M/S. NIADER MAL AMAR NATH & ORS.         ...APPELLANTS
                    Through: Mr. V.B. Andley, Sr. Advocate with
                              Mr. Mukesh Kumar, Advocate.

                                                Versus

RUKMANI DEVI JAIPURIA
CHARITABLE TRUST & ORS.                                           ...RESPONDENTS
                      Through:                        Mr. Sanjeev Sachdeva &
                                                      Mr. Preet Pal Singh, Advocates.

CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL

1.        Whether the Reporters of local papers
          may be allowed to see the judgment?                           Yes

2.        To be referred to Reporter or not?                            Yes

3.        Whether the judgment should be                                Yes
          reported in the Digest?

SANJAY KISHAN KAUL, J.

1. Smt. Rukmani Devi filed an eviction petition on 09.02.1973

against the appellants under Section 14(1)(a), (b) and (j) of

the Delhi Rent Control Act, 1958 (hereinafter to be referred

to as, the said Act) in respect of the tenanted premises

bearing No.321/322/372, Katra Gauri Shankar, Chandni

Chowk, Delhi. The present premises were stated to be let out

to appellant No. 1 and the tenant was stated to be in arrears

of rent. It was further alleged that appellant No.1 had sub-

let/assigned or otherwise parted with the premises to

_________________________________________________________________________________________________________

appellant No. 2 without the written consent of the landlord.

An allegation was also made about the appellants causing

substantial damage to the property.

2. The Additional Rent Controller (hereinafter to be referred to

as, the ARC) after recording evidence decided the dispute in

terms of the order dated 23.09.1996 after a protracted

litigation. The appellants were found to be in arrears of rent,

but were given the benefit of Section 14(2) of the said Act in

view of there being the first default. Insofar as the allegation

of sub-letting is concerned, it was found that the landlady

had been able to establish her case. The position was same

in respect of the allegation of substantial damage to the

premises, but the ARC found that the nature of damages

were such that repairs would not be the appropriate remedy

and, thus, appellant No.1 was directed to pay a sum of

Rs.25,000/- as compensation to the respondent.

3. The appellants aggrieved by the said order filed an appeal

before the Rent Control Tribunal (hereinafter to be referred

to as, the Tribunal). The cross-objections were also filed by

the successors to the landlady, who had since expired and

who are trustees of the respondent in the present petition.

The respondent is a charitable trust. The appeals were

disposed of by the common order dated 02.04.1998. No

dispute was really raised in respect of the ground under

Section 14(1)(a) of the said Act. The controversies were

limited to Section 14(1)(b) of the said Act in respect of which

the appeals of the appellants were dismissed and the cross-

objections of the respondent in respect of Section 14(1)(j) of

_________________________________________________________________________________________________________

the said Act were allowed and a direction was passed in

respect of the damages granted by the ARC that instead of

the same the substantial damage should be removed and

the property be put back in the original position.

4. The appellant thereafter filed a second appeal which was

dismissed by this Court on 6.9.2006. An application filed by

the respondents/landlord seeking directions against the

appellants/tenants to pay damages for use and occupation

from 23.9.1996, the date of the eviction order, was also

considered along with the appeal being, CM No.7600/2005.

The respondents relied upon the observations of the Apex

Court in M/s. Atma Ram Properties (P) Ltd. Vs. M/s. Federal

Motors Pvt. Ltd. 2004 (VII) SLT 494 to advance the

proposition that where the tenancy stands terminated with

the passing of decree of eviction, 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 earned rent if the

tenant would have vacated the premises. It was held that

the landlord was not bound by the contractual rate of rent

effective for the period preceding the date of the decree.

This view has been affirmed in Anderson Wright Vs. Amar

Nath Roy & Ors. 2005 (III) SLT 702.

5. The respondents prayed in this application that the prevalent

rate would be around Rs.1.50 lakh per month and that

appellant No.1 had illegally sub-let the premises to third-

parties getting monthly rental of about Rs.1,00,000.00 from

two parties and more than Rs.45,000.00 per month from

_________________________________________________________________________________________________________

their own business. The respondent also sought to derive

support from the written statement filed by the appellants

before the Competent Authority (Slum Area) alleging that the

value of the suit property was more than Rs.1.50 crore and

thus yielding a return of 12 per cent per annum would result

in a monthly rental of Rs.1.50 lakh. However, in terms of the

order dated 6.9.2006 it was found that the material placed

on record was not sufficient to determine the exact rate of

damages to be paid though a conclusion was reached that in

a matter of this nature damages ought to be determined and

paid to the landlord especially taking into consideration the

fact that the eviction proceedings before the trial court itself

had gone on for almost 23 years and 10 years had been

spent in the appellate court. It was, thus, observed that the

appellants having taken benefits of the interim orders in

appeal were liable to pay damages to the respondents but

the amount to be paid would be determined after an inquiry

was made by the Registrar General of this Court after calling

for evidence from both the parties.

6. The Registrar General thereafter proceeded to hold an

inquiry in this behalf giving opportunities to both the parties

to lead evidence. The appellants filed SLP (Civil)

No.16115/2006 before the Supreme Court aggrieved by the

order passed on 6.9.2006. One of the questions of law

raised in the SLP was as under:

"(iii). Whether the High Court on an application filed by the respondent in the Appeal filed by the Petitioners, after dismissing the Appeal, can direct the parties to lead evidence with respect to an

_________________________________________________________________________________________________________

ancillary matter regarding the damages which was not the subject matter of the main proceedings?"

7. The SLP was dismissed on 9.10.2006 in the following terms:

"We are not inclined to entertain this Petition under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed. Learned counsel for the petitioner has made a prayer that the petitioner may be granted some time to vacate the premises. Liberty is granted to the petitioner to approach the High Court for this purpose."

8. The aforesaid makes it clear that the appellants did seek to

challenge the order dated 6.9.2006 including in respect of

the direction made for holding an inquiry for quantification of

damages but the same did not find favour with the Supreme

Court while dismissing the SLP on 9.10.2006. The only

liberty granted was for the appellants to approach the High

Court for grant of some time to vacate the premises.

9. The appellants, despite this fact, once again sought to rake

up this issue by praying for recall of the order dated

6.9.2006 on the ground that the inquiry proceedings before

the Registrar General could not proceed by filing CM

No.15953/2008. Learned counsel for the appellants faced

with this position could not really canvass anything in

support of the proposition that the aspect of the direction

passed on 6.9.2006 dealing with the issue of determination

of damages needed to be re-looked and thus it does not form

part of the synopsis submitted by learned counsel for the

appellants. In this behalf, learned counsel for the

respondents has referred to the observations of the Supreme

Court in Hope Plantations Ltd. Vs. Taluk Land Board (1999) 5

SCC 590 in para 26 to advance the proposition that at least

_________________________________________________________________________________________________________

between the parties in question in the present proceedings

this question is no more open and that this Court is fully

entitled to determine the damages. The observations read

as under:

"26. It is settled law that the principles of estoppel and res judicata are based on public policy and justice. Doctrine of res judicata is often treated as a branch of the law of estoppel though these two doctrines differ in some essential particulars. Rule of res judicata prevents the parties to a judicial determination from litigating the same question over again even though the determination may even be demonstratedly wrong. When the proceedings have attained finality, parties are bound by the judgment and are estopped from questioning it. They cannot litigate again on the same cause of action nor can they litigate any issue which was necessary for decision in the earlier litigation. These two aspects are "cause of action estoppel" and "issue estoppel". These two terms are of common law origin. Again, once an issue has been finally determined, parties cannot subsequently in the same suit advance arguments or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is to approach the higher forum if available. The determination of the issue between the parties gives rise to, as noted above, an issue estoppel. It operates in any subsequent proceedings in the same suit in which the issue had been determined. It also operates in subsequent suits between the same parties in which the same issue arises. Section 11 of the Code of Civil Procedure contains provisions of res judicata but these are not exhaustive of the general doctrine of res judicata. Legal principles of estoppel and res judicata are equally applicable in proceedings before administrative authorities as they are based on public policy and justice."

10. The Registrar General submitted a report dated 2.4.2009

and it is the findings of this report which are sought to be

challenged by the appellants. The consequence of the same

is that CM No.15953/2008 has to be dismissed and it is only

the report furnished in pursuance to the directions contained

_________________________________________________________________________________________________________

in the order dated 6.9.2006 on CM No.7600/2005, which

would have to be examined.

11. The respondent led evidence first and examined six

witnesses while the appellants examined two witnesses. The

respondents in order to substantiate the prevalent rent have

produced four lease deeds which have been exhibited as

Exhibits R-1 to R-4. Exhibit R-1 is in respect of premises

No.1822-23, Chandni Chowk, Near Gurudwara Shish Ganj on

the ground floor in respect of 200 sq. ft. carpet area let out

to the ICICI Bank Limited on a monthly rent of Rs.29,000.00

w.e.f. from 10.2.2005 for a period of nine years with

provision for increase of rent every three years. The rent in

February 2005, thus, came to Rs.145.00 per sq.ft. per

month. Exhibit R-2 is a lease sale deed in respect of

premises located in Ward No.6, Chandni Chowk, Delhi leased

out to M/s. Karnataka Bank for a period of ten years. The

report shows that the rate of rent works out to Rs.140.00 per

sq. ft. per month. The rate of rent of Rs.190.00 per sq.ft. per

month effective from December 2004 is in respect of shop

No.451, Chandni Chowk measuring 275 sq.ft. leased out to

M/s. Baluja Shoe Company (Exhibit R-3). The last lease deed

is Exhibit R-4 in respect of a shop in Katra Chugmal Rathi,

Nai Sarak having an area of 86 sq.ft. @ Rs.116.00 per sq. ft.

per month. The respondent has also proved an offer letter

by a real estate agent of Rs.150.00 per sq.ft. per month for

the demised premises. We may notice at this stage that the

appellants finally delivered possession of the suit premises

_________________________________________________________________________________________________________

to the respondent on 18.11.2006 and thus the question of

determination of damages is only up to that date.

12. The appellants have led really a different nature of evidence

altogether. It appears that the appellants sought to prove

rates of rent prevalent for properties earlier let out and

protected by the Rent Act, as PW-1 stated that he had rented

a shop in Naya Katra, Chandni Chowk since 1976. The shop

was, in fact, taken on rent by his late father in the year 1934

and the rate of rent for 256 sq.ft. on the first floor and 64

sq.ft. on the second floor for the period 1.4.1995 to

31.3.1996 was Rs.103.15 per month. This would increase

every ten years but after amendment to the Rent Act came

into force in 1988, the landlord became entitled to an

increase of rent of 10 per cent after every three years. The

witness on being cross-examined in the witness box stated

that he was not aware of the prevailing market rent in Naya

Katra.

13. Learned counsels for the parties have sought to challenge

the respective evidence led by them by contending that the

evidence was irrelevant for the purposes of determining the

market rates at the relevant period of time. It is contended

on behalf of the appellants that the lease deeds Exhibits R-1

to R-4 are for the period end 2004 and early 2005 and that

too in Chandni Chowk. No evidence was led in respect of

shops in Naya Katra which is a cloth market while the

premises forming subject matter of Exhibits R-1 to R-4 are

located near the main roads and in better locations. Learned

counsel for the appellants also sought to refer to some

_________________________________________________________________________________________________________

judgements to advance the proposition that if the landlord

has not led any cogent evidence to substantiate the rate of

rent for the concerned period and for the relevant area then

it is a case of no evidence. A reference in this regard was

made to the Division Bench judgment of this court in

National Radio and Electronic Co. Ltd. vs. Motion Pictures

Association, 122 (2005) DLT 629. Learned counsel for the

appellant has also referred to the judgment in P.S. Bedi v.

Project & Equipment Corpn. Of India Ltd., AIR 1994, Del 255,

where it has been held that damages can be awarded at

market rate for use and occupation provided the same is not

penal or unconscionable. In my considered view, it is suffice

to say that it is a well established principle of law which does

not need any elucidation that it is only the relevant evidence

of similar premises for the relevant period of time which

would form the basis of determination of damages and if no

cogent evidence is led then it is akin to a case of no

evidence. Thus, the only question to be examined is

whether any relevant material has been brought on record

by either of the parties from which a conclusion can be

drawn about the rate of rent.

14. It must be appreciated that the area where the tenanted

premises is located and adjacent areas are really subject

matters of old tenancies. It is not easy to find

contemporaneous evidence of letting in exactly the same

location. This also appears to be a reason that even the

appellants have not led any direct evidence of the same area

for the relevant period of time. The respondents have led

_________________________________________________________________________________________________________

evidence of nearby areas for the year 2004-2005. It is not

possible to conclude that such evidence is no evidence in the

eyes of law though modulation of the rates is to be done

keeping in mind the location of the premises. In fact, this is

exactly what has been done in the report of the Registrar

General sought to be impugned by the appellants. The

Registrar General has noted that the demised premises is

located in the wholesale cloth market, i.e. Naya Katra, which

is at a short distance from the main Chandni Chowk area and

Katra Rathi, Nai Sarak. Thus, the evidence led is not of

totally irrelevant areas but of adjacent areas. Some marking

down would have to be done since the demised premises is

in the wholesale cloth market area and thus the Registrar

General concluded that at least 50 per cent of the rate would

be a reasonable rate. The rate taken by the Registrar

General is, thus, Rs.70.00 per sq.ft. The area of the demised

premises being 800 sq.ft. the rate of rent has been

calculated at Rs.56,000.00 per month. Learned counsel for

the respondents, in fact, stated that the premises occupied

by the appellants was larger but having litigated for all these

years he was not interested in any manner disputing the

report of the Registrar General and offered that even from

that rate some amount may be deducted for monthly rent in

respect of period prior to the date of tenancy as specified in

Exhibits R-1 to R-4. Learned counsel for the respondents,

thus, submitted that as for future 10 per cent increase takes

place and for the past period 10 per cent depreciation in the

rate of rent has to be applied.

_________________________________________________________________________________________________________

15. An important aspect to be noticed is that the own

assessment of the appellants while opposing the grant of

permission to sue by the Competent Authority (Slum Area)

was that the premises could not be purchased for less than

Rs.1.50 crore. This formed a part of the admission of the

appellants in the written statement in October 2004. In the

deposition of the Partner of appellant No.1 firm recorded in

the year 2006 in those proceedings it has been stated that

the premises would be worth Rs.1.50 crore to Rs.2.00 crore

on that date. The learned Registrar General has taken cue

from the valuation of the land to work out the rate of rent.

This is on the principle adopted by the Hon‟ble Supreme

Court in Collector of Kamrup Vs. Raj Chandra Sarma & Ors.

AIR 1975 SC 1905 while dealing with compensation under

the Land Acquisition Act, 1894 where the capitalized income

from the land for 25 years was taken into account for

determining the value of the land. In another judgement in

State of West Bengal Vs. Shyamapada AIR 1975 SC 1723 20

times annual income was taken into account to determine

the value of the property and if this yardstick is applied to

the demised premises, the Registrar General found that the

return would be Rs.7.50 lakh per annum which is equivalent

to Rs.62,500.00 per month, which is little more than the

figure arrived at by basing the return on Exhibits R-1 to R-4

depreciated by half.

16. I find that the very basis of calculations by the appellants is

fallacious as the premise is that it is a protected tenancy

which is entitled to increase @ 10 per cent every three

_________________________________________________________________________________________________________

years. If the appellants had vacated the premises nothing

prevented the respondents from letting out the premises at

the market value. The purpose of determination of

compensation is that once the eviction decree has been

passed against the appellants and the appellants enjoyed

stay in appeal, then the landlord must be suitably

compensated at market value, i.e. what he would have

earned if the premises were vacated. There is nothing

penal, unconscionable or unreasonable in such

determination even if it is manifold times the original rent.

This is so since if the lapse of the period of time is taken into

account, 23 years were spent in the initial litigation and ten

years in appeal.

17. The second line of attack of the learned counsel for the

appellants is that the lease deeds Exhibits R-1 to R-4 deal

with the renovated premises before they were let out and

valuable rights of further sub-letting were also given apart

from the fact that they were located on main roads. In the

demised premises no repairs had been carried out since

1967 and thus the premises were not comparable. The

letter of the property dealer is alleged not to have been

proved in accordance with law and thus no reliance can be

placed on the same as per the appellants. The written

synopsis states that the landlord had sold the property and

that the appellant had filed an additional affidavit on

17.11.2008. The appellants have filed a copy of the sale

deed dated 29.8.2007 annexed to the synopsis. If such a

sale deed was sought to be produced, then it should have

_________________________________________________________________________________________________________

been produced in accordance with law. The appellants have

sought to build a case on the same by alleging that the

property was sold for Rs.45.00 lakh vide sale deed in the

year 2007. The rental of the premises @ Rs.15,000.00 per

month in 2007 has been calculated on that basis.

18. Learned counsel for the respondents has emphasized that

the liability of the appellants to pay damages for use and

occupation for the period that the respondents were

deprived of the benefit of the eviction order is based on the

principle of restitution, which has been recognized by the

Hon‟ble Supreme Court. The aspect of restitution has been

explained by the Supreme Court in South Eastern Coalfields

Ltd. Vs. State of MP (2003) 8 SCC 648 as under:

"26. In our opinion, the principle of restitution takes care of this submission. The word "restitution" in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution of decree or order of the court or in direct consequence of a decree or order (see Zafar Khan v. Board of Revenue, U.P.10) In law, the term "restitution" is used in three senses: (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; and (iii) compensation or reparation for the loss caused to another. (See Black‟s Law Dictionary, 7th Edn., p. 1315). The Law of Contracts by John D. Calamari & Joseph M. Perillo has been quoted by Black to say that "restitution" is an ambiguous term, sometimes referring to the disgorging of something which has been taken and at times referring to compensation for injury done:

"Often, the result under either meaning of the term would be the same. ... Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortious misrepresentation, the measure of recovery is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed-upon risks, and the fairness of alternative risk allocations not agreed upon

_________________________________________________________________________________________________________

and not attributable to the fault of either party need to be weighed."

The principle of restitution has been statutorily recognized in Section 144 of the Code of Civil Procedure, 1908. Section 144 CPC speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on a par with a decree. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order. The interim order passed by the court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going against the party successful at the interim stage. Unless otherwise ordered by the court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed.

27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari11 Their Lordships of the Privy Council said: (AIR p. 271)

"It is the duty of the court under Section 144 of the Civil Procedure Code to „place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed‟. Nor indeed does this

_________________________________________________________________________________________________________

duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the court to act rightly and fairly according to the circumstances towards all parties involved."

Cairns, L.C. said in Rodger v. Comptoir D‟Escompte de Paris: (ER p.125)

"One of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression, „the act of the court‟ is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case."

This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it (A. Arunagiri Nadar v. S.P. Rathinasami). In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144.

28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the "act of the court" embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict.

_________________________________________________________________________________________________________

Whenever called upon to adjudicate, the court would act in conjunction with what is real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced. We are, therefore, of the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation."

19. Learned counsel for the respondents submitted that it is the

aforesaid principle, which is the basis for grant of damages

in M/s. Atma Ram Properties (P) Ltd. case (supra) where it

was observed as under:

"18. That apart, it is to be noted that the appellate court while exercising jurisdiction under Order 41 Rule 5 of the Code did have power to put the appellant tenant on terms. The tenant having suffered an order for eviction must comply and vacate the premises. His right of appeal is statutory but his prayer for grant of stay is dealt with in exercise of equitable discretionary jurisdiction of the appellate court. While ordering stay the appellate court has to be alive to the fact that it is depriving the successful landlord of the fruits of the decree and is postponing the execution of the order for eviction.

There is every justification for the appellate court to put the appellant tenant on terms and direct the appellant to compensate the landlord by payment of a reasonable amount which is not necessarily the same as the contractual rate of rent. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd. this Court has

_________________________________________________________________________________________________________

held that once a decree for possession has been passed and execution is delayed depriving the judgment-creditor of the fruits of decree, it is necessary for the court to pass appropriate orders so that reasonable mesne profits which may be equivalent to the market rent is paid by a person who is holding over the property.

19. To sum up, our conclusions are:

(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 insofar 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 latter date."

20. On consideration of the submissions of the parties it is

obvious that the premise on which damages were held liable

to be paid in M/s. Atma Ram Properties (P) Ltd. case (supra)

and Anderson Wright case (supra) is the principle of

restitution which has been elucidated in South Eastern

Coalfields Ltd. case (supra). The relevant portions of the

judgements have been extracted aforesaid and need no

_________________________________________________________________________________________________________

repetition. The basic objective is that where the parties

enjoy a benefit of a stay order in appeal, the appellate court

would have jurisdiction to impose such terms as would

reasonably compensate the decree holder for the loss

occasioned by the delay in execution of decree by the grant

of stay order. Thus, in premises governed by the provisions

of the Rent Act, the tenancy does not terminate merely by

termination under general law but terminates while passing

a decree of eviction. The tenant is liable to pay mesne

profits/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 earned rent if the tenant would

have vacated the premises.

21. It has already been noticed above that the appellants have

led no material evidence as the evidence produced is on the

premise that the premises is protected by the Rent Act,

which cannot be the basis for determination of the amount

especially in view of the observations in para 19 (2) of the

judgement in M/s. Atma Ram Properties (P) Ltd. case (supra).

The appellants have produced lease deeds but of adjacent

areas. The complete area is commercial including the area

in question though the demised premises fall in a cloth

market. There are some differences on account of location

of the premises relied upon by the respondents which have

been emphasized by learned counsel for the appellants. I,

however, find that the best evidence which could have

formed the basis of such determination in the absence of

any direct evidence of the area concerned would have been

_________________________________________________________________________________________________________

the sale transaction entered into by the respondents

themselves. The appellant did file the additional affidavit

bringing to notice the sale of the property but the sale deed

was not produced. The respondents also did not disclose

this fact at an earlier stage nor was the sale deed produced.

The sale deed came to be filed only along with the synopsis

and thus it was deemed appropriate on examination of the

matter to put this sale deed to the respondents who have

admitted the same. It is not necessary to go into the

circumstances in which the sale took place but suffice to say

that the property in open market was able to fetch a sum of

Rs.45.00 lakh in the position it was unencumbered by the

tenancy as it had been vacated by then and, thus, would be

reflective of a true market value of the property. The

principles applied by the learned Registrar General following

the judgements of the Supreme Court in Collector of Kamrup

case (supra) & State of West Bengal case (supra) thus

become material. If a more conservative approach is taken

of 25 times the annual income to determine the value of the

property then the income at the time of sale of the property

in August 2007 would amount to Rs.15,000.00 per month as

pointed out in the synopsis of learned counsel for the

appellants. I am inclined to accept this submission and the

amount stated by the appellants in view of the sale

transaction having been carried out by the respondents

themselves. There really can be no quibble over this amount

being payable by the appellants.

_________________________________________________________________________________________________________

22. The matter does not end at this since the premises were

vacated on 18.11.2006, which is not far off from the date of

the sale deed of 29.8.2007. The present application was

filed in May, 2005. The respondents during the pendency of

the appeal before the first appellate tribunal or before this

Court never moved any application thereby claiming any

amount towards damages. It appears that the judgment in

M/s. Atma Ram Properties Ltd.‟s case (supra) seems to have

given a thought to the respondents to move for such

damages. There is also an aspect of the delay in disposal of

the appeal. Thus, the two aspects, which will have to be

considered, would be -- (i) the period for which the damages

are to be granted; and (ii) the rate at which the damages are

to be granted. I am of the view that the ends of justice

would be served if the period is restricted from the filing of

application till vacation, which is the period of 18 months.

The rate of Rs.15,000/- per month is in close proximity with

the time and can, thus, be applied to this period of 18

months. Thus, the total amount of damages would come to

Rs.2,70,000.00.

23. The amount being in the nature of restitution is quantified at

Rs.2,70,000.00. I am conscious of the fact that at this stage

the amount looks large as compared to the rental being paid

but then the appellants have had the benefit of occupying

the property for about ten years in terms of the stay orders.

If the amounts would have been calculated as per the report

of the Registrar General, they would have been far more

exceeding Rs.50.00 lakh. The amount being granted is on

_________________________________________________________________________________________________________

the basis of the calculation advanced by learned counsel for

the appellants and prospectively to the application applying

the principle of calculation as laid down in the report of the

Registrar General based on judgments of the Supreme Court.

24. The result of the aforesaid is that CM No.7600/2005 is

allowed granting a sum of Rs.2,70,000.00 to the respondents

payable by the appellants as the amount of mesne

profits/damages for use and occupation of the damages to

be paid within one month failing which it will carry interest of

12% per annum. Needless to say, the amount already paid

by the appellant will be deducted therefrom. CM

No.15953/2008 is dismissed.

25. The respondent shall also be entitled to costs of Rs.10,000/-.

AUGUST 07, 2009                                                SANJAY KISHAN KAUL, J.
b'nesh

_________________________________________________________________________________________________________