M/S Pal Synthetics Pvt.Ltd. vs Bank Of Maharashtra
2010 Latest Caselaw 1635 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI


%                  Judgment Reserved on: 18.3.2010
                  Judgment Delivered on: 23.3.2010

                   + CS(OS) No. 549/2001


M/S PAL SYNTHETICS PVT. LTD.       ..........Plaintiff
              Through: Mr.Y.R.Grover & Mr.Rajesh Luthra,
                        Advocates.

                   Versus


BANK OF MAHARASHTRA                       ..........Defendant
             Through:          Mr.Rajesh Kumar, Advocate.




CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

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

     2. To be referred to the Reporter or not?             Yes

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



INDERMEET KAUR, J.

1. Suit property is 50% portion of ground floor of property

bearing no.5/67, W.E.A., Padam Singh Road, Karol Bagh, New

Delhi measuring 1105 sq. feet. Plaintiff, the landlord of the suit

property had vide registered lease deed dated 01.12.1983 leased

out the suit property to the defendant bank for a period of nine

years and ten months. Lease was for a fixed period; monthly rent

was Rs.19,899/-; after the expiry of five years the defendant started

paying the increased rental of Rs.22,883.85 i.e. 15% increase in

the rent in terms of the lease deed. The lease expired by efflux of

time on 30.9.1993.

2. During the pendency of this lease on 1.1.2001 vide two

registered sale deeds the plaintiff had become the owner of the suit

property.

3. After the expiry of lease, several negotiations orally as also

in writing were held interse between the parties for renewal of the

lease at the market rate of rent. No material decision was taken.

On 25.2.1995 plaintiff terminated/determined the tenancy of the

defendant and the called upon him to handover the vacant physical

possession of the suit property to him on or before 31.3.1995.

Defendant did not vacate the property. He, however, continued to

pay the admitted rate of rent. Present suit was filed on 12.3.2001

for possession and mesne profit/damages. During the pendency of

the suit on 25.10.2001 the suit property was vacated. All these

facts are admitted; they are not in dispute.

4. On 14.8.2003 the following issues were framed:-

1. Whether the plaint has been signed, verified and filed

by a duly authorized person? (OPD)

2. Whether no valid notice under Section 106 of the

Transfer of Property Act was served upon the

defendant? If so, to what effect ? (OPD)

3. Whether the suit has not been properly valued for the

purpose of Court fee and jurisdiction? (OPD)

4. Whether the plaintiff is entitled to the arrears of

rent/damages as prayed? (OPP)

5. Whether the plaintiff is entitled to mesne profits? If so,

at what rate and for what period? (OPP)

6. Whether the plaintiff is entitled to interest? if so, at

what rate and on what amount? (OPP)

7. Relief.

5. The plaintiff in support of his case has examined one witness

namely Harmanjit, PW-1, Director of the plaintiff company. The

defendant in support of his case has examined two witnesses

namely Anil Kumar Manikar, DW-1, Senior Manager as also Om

Prakash, DW-2, Manager of the defendant company.

6. Arguments have been heard. Record has been perused.

Issue-wise findings are as follows:-

7. ISSUE NO.1:

PW-1 Harmanjit has on oath deposed that he being a director

of the company was authorized to sign and verify the pleadings.

Board resolution dated 2.2.2001 Ex.PW-1/1 had authorized him to

do so. There is nothing in the cross-examination which could

dislodge this version. Issue no.1 is decided in favour of the

plaintiff and against the defendant.

8. ISSUE NO.2:

Onus to discharge this issue was on the defendant. Notice

dated 25.2.1995 had been served upon the defendant by the

plaintiff terminating his tenancy w.e.f. 31.3.1995 asking him to

handover the vacant and physical possession of the property to the

plaintiff. This document has been proved as Ex.PW-1/5. Damages

@ Rs.100/- per sq. feet for the unauthorized use and occupation of

the premises w.e.f. 1.10.1993 had also been claimed. This was a

clear and unambiguous intention of the lessor to the lessee

specifically notifying that since the tenancy had expired by efflux of

time, he was liable to vacate the property and handover the vacant

and physical possession of the same to the lessor on the last date of

the next calendar month i.e. by 31.3.1995. The twin requirements

of a notice under Section 106 of the Transfer of Property Act

(hereinafter referred to as the T.P.Act):

(i) a minimum period of 15 days time for the tenant to vacate

the premises;

(ii) this time should expire with the end of the tenancy

month;

are fulfilled.

9. These averments in the plaint have been reiterated by PW-1

on oath in Court. Nothing contrary has been elicited in his cross-

examination. Notice Ex.PW-1/5 in fact is not disputed; it is an

admitted document. In the written statement, the defendant has

admitted these documents and the relevant extract reads as "the

plaintiffs through their counsel, vide registered AD notice dated

25.02.1995 terminated/determind the tenancy of the Defendant-

bank and called upon it to vacate and hand over the physical

vacant possession of the suit property to the plaintiffs on or before

31.3.1995".

10. This was a valid notice under Section 106 of the T.P. Act.

Issue no.2 is decided in favour of the plaintiff and against the

defendant.

11. ISSUE NO.3:

The onus to discharge this issue was on the defendant. No

evidence has been led on this score. Plaintiff in para no.30 of the

plaint has stated that the suit has been valued for the purposes of

court fee and jurisdiction for Rs.2,74,606.20 being the last paid

rent/use and occupation charges for one year on which ad valorem

court fees of Rs.5,028.60 has been paid. For the recovery of

damages valuation of suit has been fixed at Rs.31,54,200/- on

which ad valorem court fees of Rs.33,137/- has been paid. Total

court fees of Rs. 38,166/- has been paid. Further the plaintiff has

undertaken to pay the additional court fee, if so, directed in terms

of the mesne profits/damages if awarded at a higher rate.

12. Issue no.3 is decided in favour of the plaintiff and against the

defendant.

13. ISSUES NO.4 & 5:

These issues shall be decided by a common discussion. It is

not in dispute that the property has been vacated on 25.10.2001.

This finds mention in the deposition of both PW-1 and DW-1. It is

also not in dispute that the rate of rent first agreed between the

parties in terms of the lease deed dated 1.12.1983 has been paid

by the defendant to the plaintiff up to 30.9.1993. The lease has

been determined by efflux of time on 30.9.1993. Thereafter

admittedly no document has been executed between the parties

renewing their lease. Tenancy has become month to month. The

plaintiff vide Ex.PW-1/5 has validly terminated the tenancy of the

defendant w.e.f. 31.3.1995. After 1.4.1995 defendant had become

became an unauthorized occupant and liable to pay mesne

profit/damages for his unathorised use and occupation.

14. Question is what is the amount which is payable by the

defendant?

15. PW-1 on oath has placed on record a lease dated 30.9.1998

executed between the defendant bank and Gagan Sachdeva in

respect of the mezzanine floor of the same property i.e. the

property bearing no.5/67, Ajmal Khan Road, Karol Bagh. This

document has been proved as Ex. PW-1/11. In the mezzanine floor

of the same property the rate of rent was Rs.39/- per sq. feet i.e.

w.e.f. 1.10.1996 to 30.9.1999 thereafter w.e.f. 1.10.1999 to

30.9.2002 @ Rs.51/- per sq. feet. The pro rata increase in the rate

of rent has also been detailed in para no.26 of the affidavit of PW-1.

16. Defendant to counter this evidence has on oath deposed that

during the year 1998 to 2001 rate of rent in the locality where the

suit property is situated was not more Rs.30/- to Rs.40/- sq. per feet

per month. The present rate of rent is Rs.30/- to Rs.35/- per sq.

feet per month. Witness has deposed in December 2003. He has

further deposed that from inquiry it has been revealed that Bank of

Baroda has been paying rent @ Rs.55/- per sq. feet per month in

respect of ground floor, Oriental Bank of Commerce has been

paying the rent @ Rs.40/- per sq. feet per month, South Indian

Bank has been paying the rent @ Rs.42.50/- per sq. feet per

month, Andhra Bank has been paying the rent @ Rs.21/- per sq.

feet per month, Bank of Baroda (Ajmal Khan Road Branch) has

been paying the rent @ Rs.17/- per sq. feet per month, Corporation

Bank has been paying the rent @ Rs.45/- per sq. feet per month in

respect of ground floor and the Indian Bank has been paying the

rent @ Rs.36/- per sq. feet per month.

17. However, no document has been produced to substantiate

these averments. In his cross-examination, DW-1 has admitted that

he has no documents to show what was the prevailing rate of rent

as has been deposed by him in his examination-in-chief. DW-2 has

deposed that the defendant is not liable to pay any use and

occupation charges as defendant has paid up to date rent up to

30.9.2001.

18. Defendant has submitted that the plaintiff has without any

demur or protest admittedly accepted this rent up to 30.9.2001.

This does not now entitle him for any claim of damages or mesne

profit.

19. In C. Albert Morris v. K.Chandrasekaran & Ors. 2005(2) RCJ

148 (SC), the Supreme Court has held:

" We are, therefore, of the opinion that a mere acceptance of rent by the landlord-1st respondent herein from the tenant in possession after the lease has been determined either by efflux of time or by notice to quit would not create a tenancy so as to confer the erstwhile tenant the status of a tenant or a right to be in possession."

20. In Punjab National Bank v. Riviera Apartments Pvt. Ltd.

140(2007) DLT 649(DB), it has been held by a coordinate Bench

of this Court that a acceptance of rent would not amount to a

waiver of the notice under Section 113 of the T.P.Act.

21. This argument of the learned defence counsel is thus

negatived.

22. Reliance has also been placed on the provisions of Section

116 of T.P.Act to advance the submission that after the expiry of

the lease deed defendant has become a tenant on month to month

basis. Reliance has been placed upon Burmah Shell Oil

Distributing vs. Khaja Midhat Noor & Ors. AIR 1988 SC 1470.

There is no doubt to this proposition. The registered lease deed

has admittedly expired by efflux of time. There has been no

extension of the same; a lease for a period of exceeding one year

could have been extended only by a registered instrument. In the

absence of such a registered instrument a lease should be deemed

to be a lease from month to month. In terms of Section 107 of the

T.P.Act a lease in the absence of registered instrument becomes a

monthly lease. This proposition is not disputed. However, the

subsequent termination of the tenancy in terms of Ex.PW-1/5 is a

valid termination and the monthly lease has been terminated by the

plaintiff w.e.f. 31.3.1995 after which the defendant has become a

tenant at sufferance and liable to pay charges for his unauthorized

use and occupation.

23. Attention has been drawn to the inter se communications

between the parties. On 06.7.1997 vide Ex.PW-1/6 defendants

wrote to the plaintiff conveying to them that they have received a

sanction for renewal of the lease deed of the 50% of the ground

floor portion let out to them by the plaintiff. In terms of this letter

the enhanced rent would be Rs.50/- per sq. feet per month which

would be effective from 1.4.1997 with a revision of 25% after five

years; this lease period would be 10 years commencing from

1.10.1993. On 1.8.1997 vide Ex.PW-1/7 the plaintiff making a

reference to the letter Ex.PW-1/6 wrote to the defendant that the

prevailing market rent is Rs.100/- per sq. feet per month and the

offer of Rs.50/- per sq. feet per month is not acceptable. On

14.7.1998 the plaintiff wrote to the defendant bank informing them

that since the past one year the rent is not being accepted as the

same requires escalation and in spite of reminders it has not been

revised. This was reiterated by the plaintiff in his letter dated

21.7.1998. In this letter the demand draft of Rs.18,306.85

encashed by the plaintiff was returned to the defendant stating

that the same has been encashed due to oversight; it was

reiterated that the rent is not being accepted as it has not been

escalated.

24. Legal notice dated 10.2.2001 had been served upon the

defendants by the plaintiff making a demand of Rs.100/- per sq.

feet per month as damages w.e.f. 1.10.1993; receipt of this legal

notice is not disputed. On 28.2.2001 vide Ex.P-2 the defendant

had replied to the legal notice of the plaintiff. It was stated that

the plea of the plaintiff to enhance the rent was only a harassment

on the defendant. He denied his liability to pay enhanced rent.

25. It is not in dispute that 50% of the remaining portion of the

ground floor of the suit property had also been let out to the bank

by its co-owner namely Man Mohan Singh. The said Man Mohan

Singh had filed a suit for possession for recovery of mesne profits.

The said suit had been decreed on 29.4.2000; mesne

profit/damages for use and occupation had been awarded @ Rs.90/-

per sq. feet per month which had been modified in appeal to

Rs.60/- per sq. feet per month with direction to the trial court to

conduct inquiry. Trial court on inquiry had concluded that the

rate of Rs.60/- per sq. feet per month for use and occupation was

just and fair. This was for the adjoining portion of the present suit

property.

26. Mesne profits have been claimed for the preceding three

years i.e. three years prior to the filing of the suit which would be

from 11.3.1998. This is specifically averred in the plaint. Plaintiff

has staked his claim only from 11.3.1998 to 12.3.2001.

27. On record, it has been proved that the adjoining property i.e.

50% of the share which is co-owned by Man Mohan Singh had been

decreed for the mesne profits/damages @ Rs.60/- per sq.feet per

month w.e.f. 20.11.1997 up to 30.9.2001. Order of District Judge

dated 29.4.2000 on the application under Order 20 Rule 12 of the

CPC in the said suit is on record. In the present case there is a

further positive evidence to substantiate the averment of the

plaintiff that rent of the adjoining property i.e. for the mezzanine

floor in the same building was @ Rs.39/- per sq. feet per month

from the October 1996 up to September 1999 and thereafter at

Rs.51/- per sq. feet per month from October 1999 to September

2002. These are the relevant periods for which the plaintiff is

entitled to make his claim. Admittedly, this rate of rent is for the

mezzanine floor. Judicial notice is taken of the fact that the rent of

the ground floor has to be higher in comparison to the rent being

paid for the mezzanine floor. A pro rata increase in the rental of

the mezzanine floor qua the ground floor has been tabulated in a

chart and finds mention in para no.26 of the evidence by way of

affidavit of PW-1. The rate of Rs.39/- for the mezzanine floor would

pro rata increase to Rs.90.71 for the period 1.10.1996 to 30.9.1999

and for the period 1.10.1999 to 30.9.2002 corresponding rate of

Rs.51/- would be enhanced to Rs.118.92 for the ground floor. This

pro rate revision has not been challenged in the cross-examination

of PW-1. The rental of the ground floor is by and large double the

amount of the rental of the mezzanine floor. This calculation is

accepted.

28. Plaintiff is thus entitled to damages/mesne profits for 18

months @ 80/- per sq. feet per month (double of Rs.39/- per sq. feet

per month for the mezzanine floor) and from the period 12.9.1999

up to the date of filing of suit i.e. 12.3.2001 for the balance 18

months @ Rs.100/- per sq. feet per month (double of Rs.51/- per

sq. feet per month for the mezzanine floor). Plaintiff would

accordingly be entitled to damages/mesne profits for 18 months @

Rs.80/- per sq. feet per month and for the next 18 months @

Rs.100/- per sq. feet per month; this would be minus the "rental"

which had already been paid by the defendant to the plaintiff i.e.

up to 1.10.2001. The amount calculated for the first 18 months

@ Rs.80/- per sq. feet per month would be Rs.15,91,200/- and for

the next 18 months @ Rs.100/- per sq. feet per month would be

Rs.19,89,000/- i.e. a total sum of Rs.35,80,200/-.

29. For the period from 1.4.2001 up to 25.10.2001 i.e. the seven

months intervening period when the possession was finally handed

over by the defendant to the plaintiff, plaintiff is entitled to

damages/mesne profits @ Rs.100/- per month which is calculated in

the sum of Rs.7,73,500/-.

30. Total amount thus due and payable is Rs.43,53,700/-. The

"rental" as paid by the defendant to the plaintiff has to be deducted

which is calculated Rs.9,84,005/-; balance amount due and payable

to the plaintiff is Rs.33,69,695/-.

31. Issues no.4 and 5 are decided accordingly in favour of the

plaintiff and against the defendant.

32. ISSUE NO.6:

Although there is no stipulated rate of interest which has

been carved out and there is no document to the said effect yet

DW-1 has admitted that the defendant bank is liable to pay

interest. Being a commercial transaction; rate of interest @ 12%

per is fair and just. Decree will carry interest @ 12% per annum

which will be calculated from the date of filing of the suit till

realization.

33. ISSUE NO.7: RELIEF:

Suit is decreed in the sum of Rs.33,69,695/- with interest @

12% per annum to be paid from the date of filing of the suit till

realization. Subject to the plaintiff depositing the additional court

fee, decree sheet be drawn. File be consigned to record room.

(INDERMEET KAUR) JUDGE MARCH 23, 2010 nandan