Delhi High Court
Canara Bank vs Mk Gupta & Anr on 1 December, 2011
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA Nos. 428/2011, 429/2011, 430/2011, 453/2011,
454/2011, 455/2011 and 456/2011
% 1st December, 2011
5.
RFA 428/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
versus
MK GUPTA & ANR ..... Respondents
Through : Mr. Praveen Kumar Singh, Advocate.
WITH
6.
RFA 429/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
versus
AK GUPTA & SONS ..... Respondent
Through : Mr. Praveen Kumar Singh, Advocate.
WITH
7.
RFA 430/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
versus
RK GUPTA ..... Respondent
Through : Mr. Praveen Kumar Singh, Advocate.
WITH
8.
RFA 453/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
Versus
RAVINDER KUMAR ..... Respondent
Through : Mr. Praveen Kumar Singh, Advocate.
WITH
9.
RFA 454/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya , Advocate.
Versus
ANJALI GUPTA ..... Respondent
Through : Mr. Praveen Kumar Singh, Advocate.
WITH
10.
RFA 455/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
versus
SHASHI BALA GUPTA ..... Respondent
Through : Mr. Praveen Kumar Singh, Advocate.
AND
11.
RFA 456/2011
CANARA BANK ..... Appellant
Through : Mr. Rajiv. B. Samaiya, Advocate.
versus
MOHINDER KUMAR ..... Respondents
Through : Mr. Praveen Kumar Singh, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. By this judgment, seven appeals are being disposed of inasmuch as
they arise from identical judgments of the trial Court, and they involve same
issues of facts and law. For the sake of convenience, reference is being
made to the facts of Regular First Appeal (RFA) No. 428/2011.
2. The challenge by means of this Regular First Appeal filed under
Section 96 Code of Civil Procedure, 1908 (CPC) is to the impugned
judgment of the trial Court dated 29.4.2011. By the impugned judgment,
trial Court has decreed the suit filed by the respondents/plaintiffs/landlords
for recovery of mesne profits qua the tenanted premises.
3. The brief facts of the case are that Flat Nos. F-2 and G-12 situated in
the commercial Plot No. N, O, P, Savitri Market, Shopping Centre, Tagore
Park, near Model Town-I, Delhi- 110 009 were given on rent to the
appellant/defendant by means of a duly registered lease deed dated 8.5.1998.
The total area of the two flats was 548 sq. ft. The lease hold rights created
under the lease deed dated 8.5.1998 was for a period of five years with effect
from 20.10.1997. There was an option to the appellant/defendant to stay for
another period of five years and thus the total duration of the lease was for
ten years, expiring on 19.10.2007. The initial rate of rent was `28 per sq. ft.
per month, and which during the second period of five years became `37.80
per sq. ft. per month. The case as laid out by the respondents/plaintiffs was
that well before the expiry of the lease period on 19.10.2007, the
respondents/plaintiffs had been regularly writing to the appellant/defendant
to surrender the lease hold rights on the expiry of duration of the lease,
however, the appellant/defendant-Bank failed to hand over vacant peaceful
possession of the tenanted property. It was therefore pleaded that the
appellant/defendant was an unauthorized occupant in the suit property with
effect from 20.10.2007 and was liable to pay market rate of rent of `150 per
sq. ft. to `175 per sq. ft, the rate which was prevailing in October, 2007. It
was further the case of the respondents/plaintiffs that there were discussions
for extension of lease, however, nothing came out of the same and ultimately
a legal notice dated 6.3.2009 was also served on the appellant/defendant-
Bank, which having failed to yield the desired response inspite of a reply
received on 20.5.2009, the subject suit for possession and mesne profits
came to be filed.
4. The case of the appellant/defendant in the trial Court was that after the
expiry of the lease period on 19.10.2007 it had continuously deposited the
rent in the respective bank accounts of respondent/plaintiff and which
having been withdrawn, there is an implied consent to treat the lease as
subsisting.
5. After the completion of pleadings, the trial Court framed the
following issues:-
"1. Whether the suit of the plaintiffs is not maintainable
on account of mis-joinder of causes of action? OPD
2. Whether the plaintiffs are entitled to a decree in the
sum of Rs.7,45,718.40p., as prayed for? OPP
3. Whether the plaintiffs are entitled to a decree of
possession in respect of the impugned flats No. F-2 and G-
12 admeasuring 548 sq. ft.?
4. Whether the plaintiff are entitled to future mesne
profits and at what rate? OPP
5. Whether the plaintiff are entitled to interest @ 24%
from the date of filing of this suit till realization? OPP
6. Relief, if any."
6. I may mention that the appellant/defendant during the pendency of the
suit vacated the suit premises on 9.9.2010. The issue, therefore, which only
survived for determination before the trial Court was the claim of the
respondents/plaintiffs towards mesne profits. There were two aspects to this
claim of mesne profits. First was the period for which the mesne profits
were payable and the second aspect was the rate at which mesne profits were
to be paid.
7. On the aspect that whether after the expiry of period of lease,
acceptance of rent amounts to creation of a tenancy, the trial Court has held
in favour of the respondents/plaintiffs, by holding that it could not be said
that the respondents/landlords assented to continuation of the
appellant/defendant as a lesee in the suit premises. The trial Court has
referred to the letters of the respondents/plaintiffs written to the
appellant/defendant to arrive at a conclusion that even before the expiry of
the lease period, the respondents/plaintiffs had made it known to the
appellant/defendant-Bank to hand over possession and failing which it will
be liable to pay mesne profits. It was also informed to the
appellant/defendant that the amount which was being credited in their
account towards rent should not be credited and if the same is done, it shall
be treated to be without the consent of the respondents/plaintiffs. These
three letters are dated 30.4.2007 (Ex. PW1/8), 13.8.2007 (Ex. PW1/9) and
31.10.2007 (Ex.PW1/4). Since these letters are very material to determine
the issue as to whether there was an agreement for the appellant/defendant-
Bank to continue as a tenant, I would seek to reproduce all the aforesaid
three letters, and the same read as under:-
"FROM : M.K. GUPTA
S-257, GREATER KAILASH PART II,
NEW DELHI - 110048
TO,
THE MANAGER,
CANARA BANK,
MODEL TOWN,
DELHI
SUB : LEASE DEED DATED 08.05.1998 IN RESPECT OF FLAT
NO. F-2, FIRST FLOOR, PLOT NO. 0, TAGORE PARK, DELHI
SIR,
You are the tenant in the above premise since 20.10.1997
vide above stated lease deed for a period of 5 years with an option
of continuing for another 5 years. As such you have availed the
option of 5 years and lease shall end on 19.10.2007. Hence you are
requested to vacate the premises on 19.10.2007 (as per para 2 and
16 of the Lease Deed).
You are also requested to note the change in my/our
address instead of my/our old address i.e. W-56, GREATER
KAILASH PART II, NEW DELHI-110048, which is as under:-
M.K.GUPTA
S-257, GREATEER KAILASH PART II
NEW DELHI-110048.
Hoping an early reply in this regard.
Thanking you,
Yours truly,
M.K. GUPTA
DATED 30.04.2007"
"FROM : M.K. GUPTA
S-257, GREATER KAILASH PART II,
NEW DELHI - 110048
TO,
THE MANAGER,
CANARA BANK,
MODEL TOWN,
DELHI
SUB : LEASE DEED DATED 08.05.1998 IN RESPECT OF FLAT
NO. F-2, FIRST FLOOR, PLOT NO. 0, TAGORE PARK, DELHI
REF : MY/OUR LETTER DATED 30.04.2007 REQUESTING YOU TO
VACATE THE PREMISES IN TERMS OF LEASE DEED DATED
08.05.1998, LEASE PERIOD ENDINIG ON 19.10.2007.
SIR,
I/We invite your kind attention to our earlier letter dated
30.04.2007 as stated above and sorry to say that no reply to that
has been received till date. I/We again remind you that you are the
tenant in the above premises since 20.10.1997 vide above stated
lease deed for a period of 5 years with an option of continuing for
another 5 years. As such you have availed the option of 5 years
and lease shall end on 19.10.2007. Hence you are requested to
vacate the premises on 19.10.2007 (as per para 2 and 16 of the
Lease Deed).
In case you do not vacate the premise on 19.10.2007 and
handover the vacant and peaceful possession, you shall become as
unauthorized occupant of the premises. You shall be liable to pay
damages on day to day basis @ Rs.1244.00 (Rs.One thousand two
hundred forty four only) per day as per prevailing market rate, till
you vacate the premises."
Hoping an early reply in this regard.
Thanking you,
Yours truly,
M.K. GUPTA
DATED 13.08.2007"
"FROM : M.K. GUPTA, SHASHI BALA GUPTA and
ANJALI GUPTA
S-257, GREATER KAILASH PART II,
NEW DELHI - 110048
TO,
THE MANAGER,
CANARA BANK,
MODEL TOWN,
DELHI
SUB : Saving A/C No. 1488.
SIR,
We have the above saving account with you and
maintaining the same for the credit of our rent due from you. You are
stopped from crediting/depositing any amount on account of rent after
19.10.2007 and in case you deposit the same, it shall be treated without
our consent.
Thanking you,
Yours truly,
M.K. GUPTA SHASHI BALA GUPTA and ANJALI GUPTA
DATED 31.10.2007"
(underlining added)
A reading of the aforesaid letters clearly shows that there is no assent
of the respondents/plaintiffs/landlords for continuation of the
appellant/defendant-Bank as a tenant in the premises with effect from
20.10.2007. These letters make it abundantly clear that the
appellant/defendant-Bank was asked to vacate the premises, failing which it
was said to be liable to pay the mesne profits and any deposit of rent in the
accounts of the respondents/plaintiffs was to be treated as without their
consent.
8. The trial Court has referred , in para 25 of the impugned judgment, to
the decision of the Supreme Court in the case of Shanti Prasad Devi and
another v. Shankar Mahato and others, (2005) 5 SCC 543, to hold that
mere acceptance of rent subsequent to the lease period, cannot be said to be
assent for creation of a month to month lease. Paras 18 and 19 of the
judgment of the Supreme Court in the case of Shanti Prasad Devi (Supra)
were relied upon, and the same read as under:-
"18. We fully agree with the High Court and the first
appellate court below that on expiry of period of lease,
mere acceptance of rent for the subsequent months in which
the lessee continued to occupy the lease premises cannot be
said to be a conduct signifying 'assent' to the continuance of
the lessee even after expiry of lease period. To the legal
notice seeking renewal of lease, the lessor gave no reply.
The agreement of renewal contained in Clause (7) read with
Clause (9) required fulfillment of two conditions; first the
exercise of option of renewal by the lessee before the
expiry of original period of lease and second, fixation of
terms and conditions for the renewed period of lease by
mutual consent and in absence thereof through the
mediation of local Mukhia orPanchas of the village. The
aforesaid renewal Clauses (7) & (9) in the agreement of
lease clearly fell within the expression 'agreement to the
contrary' used in Section 116 of the Transfer of Property
Act Under the aforesaid clauses option to seek renewal was
to be exercised before expiry of the lease and on specified
conditions.
19. The lessor in the present case had neither expressly nor
impliedly agreed for renewal. The renewal as provided in
the original contract was required to be obtained by
following a specified procedure i.e. on mutually agreed
terms or in the alternative through the mediation of
Mukhias and Panchas. In the instant case, there is a renewal
clause in the contract prescribing a particular period and
mode of renewal which was 'an agreement to the contrary'
within the meaning of Section 116 of the Transfer of
Property Act. In the face of specific Clauses (7) & (9) for
seeking renewal there could be no implied renewal by
'holding over' on mere acceptance of the rent offered by the
lessee. In the instant case, option of renewal was exercised
not in accordance with the terms of renewal clause that is
before the expiry of lease. It was exercised after expiry of
lease and the lessee continued to remain in use and
occupation of the leased premises. The rent offered was
accepted by the lessor for the period the lessee overstayed
on the leased premises. The lessee, in the above
circumstances, could not claim that he was 'holding over' as
a lessee within the meaning of Section 116 of the Transfer
of Property Act."
(underlining added)
9. In fact, the Supreme Court in a subsequent judgment reported as
Sarup Singh Gupta v. S. Jagdish Singh and Others, 2006 (4) SCC 205 has
relied upon the judgment in the case of Shanti Prasad Devi (Supra) and held
that after the expiry of the tenancy, a landlord is entitled to appropriate the
amounts sent as rent by the erstwhile tenant as charges towards use and
occupation of the premises and that would not amount to creation of a fresh
tenancy.
10. I, therefore, hold that the trial Court has arrived at a correct finding
that there was no agreement to treat the appellant/defendant-Bank as a
monthly tenant in the suit premises with effect from 20.10.2007.
11. The next aspect is as to what is the rate of mesne profits which should
be awarded to the respondents/plaintiffs. Though, the respondents/plaintiffs
filed a certified copy of the lease deed of M/s ING Vysya Bank Ltd. with
respect to a premises situated at Block A-1, Model Town, Delhi- 110009.
However, since this document was not proved in accordance with law, and
admittedly it has not been exhibited, the trial Court was justified in
disregarding the said document.
12. There was however, before the trial Court enough evidence for the
suit to be decreed for mesne profits at `113.40 per sq. ft. per month. This
was because the appellant/defendant had taken premises which was barely
about 50 yds. from the suit premises and for which it was paying rent @ `72
per sq. ft. per month. Admittedly, however, these new premises are situated
in a residential area and in the facts of this case, mesne profis have to be
decided with respect to a commercial area. The issue is not what is the rent
which the appellant/defendant-Bank is paying for a premises which is
situated in a residential area, since commercial use of such premises is
permissible (in view of certain notification issued under the Master Plan of
Delhi) but the issue is the rate of rent which would be payable with respect
to the subject premises which are admittedly situated in a commercial area.
The trial Court has referred to the fact and has taken judicial notice of the
fact that in commercial areas rate of rents are higher than in residential areas
which are allowed to be used for commercial purposes. I agree. As a Bank,
the appellant may have a privilege to take premises in residential areas for
banking purposes, however, all other commercial uses of premises can only
be in designated commercial areas, and therefore, for determining the rate of
mesne profits with respect to the subject premises situated in a commercial
area, the rate of rent payable for commercial use of a residential premises
can only be a guiding factor. The trial Court considering all aspects has
therefore directed mesne profits at `113.40 per sq. ft. by making the
following observations:-
"30. Although, lease deed executed by the ING Vysya
Bank Ltd and its landlord Israni Telecom Private Ltd on
01/5/2009 is not legally proved by calling any witness from
the said bank or the landlor of the said bank. The mere
filing of the certified copy of the lease deed would not
prove it, but there is force in the argument made on behalf
of the plaintiffs that there was ceiling drive in Delhi leading
to increase in property rents of the approved commercial
premises. This factor being a matter of common
knowledge can be taken note of by this court also. Further,
the defendant bank shifted to another premises in the same
locality and according to its own witness DW1 Sh. D.V.
Joshi, by virtue of statement made in the cross-examination
the new premises to which the defendant bank has shifted it
at a distance of approximately 25 mtrs away from the suit
premises while according to plaintiff it is at a distance of 45
feet away from the suit premises. Be that as it may, the
defendant bank has shifted in the premises nearby which
according to plaintiffs is a residential premises but the
witness of defendant DW-1 in the cross-examination stated
that he could not say whether the present premises of the
bank is residential or commercial. He has also stated that
new premises is in the lease agreement at the rate of 72/-
per sq. ft. per month. There was no dispute between the
parties during the course of arguments that the suit
premises is a commercial property. It is a matter of
common knowledge that in the same locality or if the two
premises are situated nearby out of which one is
commercial property and other is residential then there is a
vast difference between the rental value of the commercial
property and that of residential property, the former has far
more rental value than latter. In the given facts and
circumstances of the case the claim of damages/mesne
profits by the plaintiff at the rate of Rs.113.40/- per sq. ft.
per month looks to be reasonable and, in my view, the
plaintiffs are entitled for the same. Therefore, the claim of
the plaintiffs of damages/mesne profits for the pre-suit
period, referred above, amounting to Rs.7,45,718.40 after
appropriation of the payments deposited by the defendant
bank in the bank account of the plaintiffs for the pre-suit
period, deserves to be allowed."
(underlining added)
13. I completely agree with the aforesaid conclusions of the trial Court
because the loss to the respondents/plaintiffs is the loss for not letting out the
subject premises which are situated in a commercial area and therefore it is a
rent of similar premises which are situated in a commercial area which will
be a determining factor for arriving at the rate of mesne profits. Some
amount of honest guess work is definitely involved in determining the mesne
profits and therefore I do not find that the trial Court has committed any
illegality and perversity in fixing the rent @ `113.40 per sq. ft. per month in
view of admitted position that just about 50 yds. away from the subject
premises, appellant/defendant-Bank took premises on the rate of `72 per sq.
ft. per month in a residential area.
14. A civil case is decided on balance of probabilities. The balance of
probabilities shows that the trial Court has arrived at correct findings of fact
and law making the appellant/Bank liable to pay mesne profits from
20.10.2007. The trial Court was also justified in determining the rent at
`113.40 per sq. ft. per month, in view of the commercial area where the suit
premises are situated.
15. No other point or issue was urged before this Court.
16. In view of the above, there is no merit in the appeal and the same is
accordingly dismissed, leaving the parties to bear their own costs. Trial
Court record be sent back.
VALMIKI J. MEHTA, J.
DECEMBER 01, 2011/AK
