Shriram Pistons & Rings Ltd vs Basant Khatri
2011 Latest Caselaw 6219 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           RFA No.568/2011

%                                                     19th December, 2011

SHRIRAM PISTONS & RINGS LTD                    ..... Appellant
             Through : Mr. T.K.Ganju, Sr. Adv. with
                       Mr. Jayant K. Mehta, Mr. Aditya Ganju &
                       Mr. Sukant Vikram, Advs.

                            versus


BASANT KHATRI                                                ..... Respondent

Through :

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal filed

under Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the

impugned judgment of the Trial Court dated 8.11.2011 decreeing the suit for

possession and mesne profits filed by the respondent/landlord.

2. The facts of the case are that the appellant/defendant/lessee vide

a lease deed dated 3.8.2005 took on lease the premises being E-35, Third

Floor, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi-110001

admeasuring 994 sqr. ft. from the then owner/landlord-Mrs. Usha Lall. This

lease deed was for a period of 3 years from 1.7.2005 to 30.6.2008. This

lease deed is not a registered document, and therefore, the tenancy would

obviously be only a monthly tenancy. The so-called period of lease expired

on 30.6.2008. The original owner/landlord, Mrs. Usha Lall in the

meanwhile on 11.6.2008 had entered into an agreement to sell of this

property with the present respondent/plaintiff. This agreement to sell dated

11.6.2008 was subsequently registered on 11.2.2009, after payment of the

requisite stamp duty and registration charges. Since the appellant/defendant

failed to vacate the property in spite of termination of the tenancy by legal

notice dt.14.7.2008, the subject suit for possession and mesne profits came

to be filed.

3. The appellant/defendant/lessee contested the suit on various

grounds. One ground was that the respondent/plaintiff had no locus standi to

file the suit, inasmuch as, he was not the owner/landlord of the premises and

there was no atornment by the appellant/defendant towards the

respondent/plaintiff. It was contended that an agreement to sell does not

create any right in the property, and since the document in question executed

between the original owner/landlord and the respondent/plaintiff was only an

agreement to sell, no rights flow to the respondent/plaintiff. It was also

argued before the Trial Court that the property was not identifiable and

therefore the suit was not maintainable. It was also argued that mesne

profits as claimed were not payable.

4. The Trial Court has held that there was a relationship of

landlord and tenant between the parties inasmuch as there was a registered

sale agreement dated 11.2.2009 entered into between the original

owner/landlord and the respondent/plaintiff. The Trial Court distinguished a

recent judgment of the Supreme Court in the case of Suraj Lamp Industries

Pvt. Ltd. vs. State of Haryana & Anr. (C) SLP 13917/2009 decided on

11.10.2011 by holding that the same is only prospective in operation. The

Trial Court has also held that the legal notice dated 14.7.2008 terminating

the tenancy was duly served upon the appellant/defendant, and in any case,

service of summons of the suits amounted to termination of tenancy. The

Trial Court while disbelieving the evidence led on behalf of the

respondent/plaintiff with respect to mesne profits, has, however, still held

that the mesne profits should be calculated at `155/- as claimed by the

respondent/plaintiff.

5. The first argument of the learned senior counsel for the

appellant before this Court is that the suit was not maintainable as the

respondent/plaintiff was not the owner/landlord of the premises. In my

opinion, this argument is without any merit inasmuch as the original

owner/landlord, Smt. Usha Lall has executed and registered the agreement to

sell dated 11.2.2009 with respect to the suit property in favour of the

respondent/plaintiff. By this agreement to sell, which is a duly registered

document, after paying the requisite amount of stamp duty, the original

owner/landlord agreed to transfer the leased property to the

respondent/plaintiff and also transferred constructive possession of the same

to the respondent/plaintiff. In pursuance to the agreement to sell, registered

on 11.2.2009, the original owner/landlord - Mrs. Usha Lall also wrote a

letter dated 11.6.2008, Ex. PW1/5, to the appellant/defendant informing of

the agreement to sell and stating that the lessee/tenant, i.e. the

appellant/defendant has now to deal with the respondent/plaintiff for the suit

property, including with respect to handing over possession or with respect

to the security deposit.

As per Section 53A of the Transfer of Property Act, 1882, once

there is an agreement to sell in writing signed between the parties and

possession is delivered, then the prospective purchaser under the agreement

to sell gets benefit of the doctrine of part performance whereby the original

owner/landlord is prevented from claiming any right of ownership in the

property as against the prospective purchaser. Before passing of the Act 48

of 2001 by the Legislature which amended various provisions of the

Transfer of Property Act, 1882, Registration Act, 1908, Court Fees Act,

1870 as applicable to Delhi, there was a misuse of this provision of Section

53A of Transfer of Property Act, 1882 whereby in order to overreach the

authorities with respect to stamp duty, registration and payment of 'unearned

increase' to the superior lessor of the land, parties were entering into an

agreement to sell and taking benefit of doctrine of part performance as per

Section 53A. The Legislature consequently brought in Act 48 of 2001

whereby an agreement to sell falling under Section 53A could not be looked

into unless the same be registered and the stamp duty paid thereon as per

90% value of the sale deed. For payment of stamp duty circle rates have

been fixed in Delhi and on which rates stamp duty is paid. Therefore once

an agreement to sell is duly registered with the necessary stamp duty having

been paid, the prospective purchaser such as the respondent/plaintiff gets

benefit of the doctrine of part performance under Section 53A of Transfer of

Property Act, 1882. The decision of the Supreme Court in the case of Suraj

Lamp (supra) was to prohibit those sets of transactions which fell foul of the

erstwhile Section 53A before the same was amended by Act 48 of 2001.

However, once, the requirement of existing Section 53A of Transfer of

Property Act, 1882 is satisfied, i.e. the agreement to sell is duly registered

and stamped, then, such agreement can definitely to be looked into and will

not fall foul either of the existing/amended Section 53A of the Transfer of

Property Act, 1882 or the judgment in the case of Suraj Lamp (supra). I am

therefore of the opinion that the respondent/plaintiff had definitely become

the landlord of the premises entitling him to possession of the suit property

on the basis of the agreement to sell registered on 11.2.2009. No doubt

remains as to the respondent/plaintiff being the landlord once we look at

atornment letter, Ex.PW1/5 dated 11.6.2008 addressed by Mrs. Usha Lall to

the present appellant/defendant. Before this Court, in my opinion, the

appellant/defendant ought to have filed a photocopy of this letter inasmuch

as, this letter contains the endorsement of receipt thereof by the

appellant/defendant which would have been clear from the photocopy by the

appellant/defendant, however, only a typed copy of this letter dated

11.6.2008 has been filed before this Court. In any case, after perusal of the

record with the learned senior counsel for the appellant, it becomes clear that

there is no cross-examination of the witnesses of the respondent/plaintiff that

the appellant/defendant/tenant did not receive this letter Ex.PW1/5 dated

11.6.2008 and nor is there any affirmative evidence led on behalf of the

appellant/defendant that it has not received this letter dated 11.6.2008,

Ex.PW1/5 from the original owner/landlord, Mrs. Usha Lall. An issue of

atornment is not a matter of choice once rights in a property are transferred,

and the original landlord directs the tenant to deal with the new

owner/landlord. In the present case, in the face of the registered agreement

to sell dated 11.2.2009 executed by the erstwhile owner/landlord in favour of

the respondent/plaintiff and the atornment letter dated 11.6.2008, Ex.

PW1/5, the appellant/defendant has no option but to take the

respondent/plaintiff as a landlord of the premises. Merely contending that

the appellant/defendant refuses to accept the respondent/plaintiff as the

landlord of the premises, cannot take its case any further and the

appellant/defendant is a tenant under the respondent/plaintiff. I also feel that

the appellant/defendant has no business to dispute the fact that the

respondent/plaintiff is the landlord inasmuch as the original owner/landlord

herself is not disputing the fact that the respondent/plaintiff is the landlord.

6. The second issue which was urged on behalf of the

appellant/defendant is that the property in question was not identifiable and

therefore no decree could have been passed with respect to such a property.

Reliance is placed in support of this argument upon Nahar Singh vs.

Harnak Singh & Ors. 1996 (6) SCC 699.

In my opinion, even this argument raised on behalf of the

appellant/defendant is also totally without substance. I would go to the

extent of saying that this argument is an argument of desperation. Surely a

tenant, who stays is a premises for many years; pays rent with respect to the

same; enters into a lease deed with respect to the same and acts on the

relationship of landlord and tenant qua the leased premises, cannot turn

around and say that no decree for possession can be passed with respect to

the tenanted premises because it is not identifiable. I may note that the

respondent/plaintiff had led the evidence being the site plan, Ex.PW3/1,

whereby the leased premises have been specifically identified at a point

mark A. Learned senior counsel for the appellant argued that there are no

dimensions given with respect to this portion which is shown as mark A,

however, when I look at the site plan which is filed before this Court, I find

that dimensions with respect to length and breadth of the leased premises are

given, and they are definitely, in any case, identifiable for the decree to be

executed. It does not lie in the mouth of the appellant/defendant/tenant to

raise frivolous defences for refusing to comply with the decree for

possession by stating that the property in question is not identifiable,

although, the appellant/defendant has taken benefit of the lease and stayed in

the leased premises, and which, as already stated above, has been identified

in the site plan Ex.PW3/1. I therefore reject this argument urged on behalf

of the appellant/defendant that the decree for possession could not be passed

as the premises could not be identified.

7. The present appeal, challenging the decree for possession, is

therefore dismissed so far as the challenge is laid to the decree for

possession inasmuch as the decree in the present case is a severable decree

in two parts, one for possession of the tenanted premises, and the other with

respect to mesne profits of the tenanted premises. I have kept in mind the

definition of the decree as provided under Section 2(2) CPC, and as per

which, a decree includes a final determination of one cause of action or one

relief as claimed by a party to a suit, i.e. a decree includes determination of

one of the matters in controversy in the suit.

8. So far as the aspect of mesne profits are concerned, the

arguments as have been addressed on behalf of the appellant/defendant are

under three heads, i.e. one with respect to the period for which the same is

payable, two qua the rate at which the same is payable, and thirdly the claim

for adjustment of the security deposit. The learned senior counsel for the

appellant/respondent argued that mesne profits have wrongly been held to be

payable at `155/- per sq. ft. It was also argued that the mesne profits were

not payable from July, 2008, but should be taken as payable only from the

date of filing of the suit. On this aspect of mesne profits, it was also argued

that the Trial Court has erred in not granting adjustment of the security

deposit amount of `15,11,100/-.

9. On the aspect as to the date from when the mesne profits are

payable, I do not find that there can be too much dispute inasmuch as the

respondent/plaintiff/landlord has proved the legal notice, Ex.PW1/10 dated

14.7.2008, along with the various postal receipts with respect to the same.

The appellant/defendant, in continuation of its trait in not filing crucial

documents against it, has not sought to assist this Court either by filing this

legal notice in this Court or the postal receipts which have been exhibited

with respect to this legal notice, although, in the bulky file various other

documents, pleadings, depositions have been filed. A reference to the

evidence which has been led in the case, and the cross-examination of the

witnesses shows that though there is a denial of receipt of the notice on

behalf of the appellant/defendant, however, once the necessary postal

receipts have been proved and exhibited in the Trial Court, and more so it is

not disputed by the appellant/defendant, that the address to which the notice

is sent was not the address of the appellant/defendant, I would hold that the

lease was determined by serving of the legal notice dated 14.7.2008.

However, I agree with the arguments of learned senior counsel for the

appellant that the mesne profits cannot definitely be granted for July, 2008,

because a lease has to be terminated by a 15 days' notice in terms of Section

106 of the Transfer of Property Act, 1882 and therefore, I would hold that

the mesne profits in this case would be payable not w.e.f. July, 2008 but

w.e.f. 15.8.2008 giving a reasonable period for service of the notice dated

14.7.2008 and an expiry of 15 days thereafter. I may at this stage note that

Section 106 of the Transfer of Property Act, 1882 was amended by Act 3 of

2003 by the Legislature whereby objections as to the notice not having

validly terminated the tenancy by the date of termination ending with the

tenanted month have been done away by the Legislature to declare that as

long as a period of 15 days' expires prior to the filing of the suit, there

cannot be objections to notice terminating tenancy as not being a valid

notice of termination of tenancy.

10. There are however crucial aspects with respect to the issue of

mesne profits, and with respect to which there prima facie is a case for

issuance of notice in this appeal. I agree with the learned senior counsel for

the appellant that once the Trial Court discarded the evidence which was led

on behalf of the respondent/plaintiff being the lease deeds, Ex.PW1/18 to

PW1/20, then, there was no other evidence to hold that the mense profits

should be `155/- per month. Of course, I am only expressing a prima facie

view, inasmuch as, I feel that possibly the lease deeds, Ex.PW1/18 to

PW1/20 can be looked as evidence inasmuch as there is no cross-

examination with respect to these lease deeds that these documents are

bogus documents or that they are fabricated documents. Further, no

objection as to exhibition of the documents has been taken at the stage at

which the documents were exhibited, i.e. before including of cross-

examination. In the present case, since there is no challenge to the exhibition

to these documents before the cross-examination began, or possibly even later,

therefore in view of the judgment of the Supreme Court reported as R.V.E.

Venkatachala Gounder vs. Arulmignu Viswesaraswami & V.P. Temples &

Anr., 2003 (8) SCC 752 any objection to the exhibition and proof of documents

is therefore deemed to have been waived by the appellant/defendant.

11. The argument of the learned senior counsel for the appellant

that the appellant is also entitled to adjustment of security deposit is also an

argument which has to be accepted in a limited manner. A security deposit

is given to ensure that at the time of vacation of the premises, there are no

dues of the appellant/defendant/tenant towards respondent/plaintiff/landlord

therefore, if on the date of handing over of the possession by the

appellant/defendant to the respondent/plaintiff/landlord, there are no dues

either towards rent, or mesne profits as per today's order, or towards

electricity or water charges or other maintenance charges, or other charges in

terms of the lease deed, then the respondent/plaintiff will be bound to give

adjustment with respect to the amount of security deposit towards the total

claim of the respondent/plaintiff under the subject money decree, and as

amended by today's orders.

12. I have held in the case of M/s. M.C.Agarwal HUF vs. M/s.

Sahara India & Ors.2011 (183) DLT 105 that even if a landlord has failed

to lead evidence with respect to prevalent rents, yet in such circumstances,

this Court can take judicial notice of increase in rent of metropolitan cities,

more so in commercial areas. In M/s. M.C.Agarwal HUF(supra), the

premises were also situated in Connaught Place and in fact on the same road,

i.e. Kasturba Gandhi Road like in the present case. In M/s. M.C. Agarwal

HUF (supra) case I have held that a 15% increase of rent every year should

be payable by a tenant to a landlord. In the present case, lease commenced,

though unregistered, for 3 years w.e.f. 1.7.2005. The so-called period of

lease expired on 30.6.2008, therefore from 15.8.2008, the date of

termination of tenancy, the mesne profits would become 15 % more than the

agreed rate of rent `44/- sqr. per feet. For each year thereafter as per the

judgment of the M/s. M.C.Agarwal HUF (supra) there will be a 15%

increase over the last paid rent. Accordingly, while directing that the

impugned judgment and decree so far as mesne profits are concerned, will

remain stayed at `155/- per sqr. feet, however subject to further orders, the

judgment and decree will operate for mesne profits commencing from

1.9.2008 with a 15% yearly increase cumulatively, i.e. 15% increase which

will be payable from second year, third year, fourth year etc after the

termination of tenancy will be 15% increase of the mesne profits on the total

of mesne profits which are payable at the end of the first year, second year

etc respectively.

At this stage, learned senior counsel for the appellant states that

at the admitted rate of `44/- per sqr. ft., the dues/charges have already been

deposited in the trial court which the respondent/plaintiff can withdraw and

the appellant agrees that the arrears of the difference of mesne profits which

are payable from 1.9.2008 till date in terms of today's order, and future

mesne profits in terms of today's judgment month-to-month would be paid

to the respondent/plaintiff till the possession is handed over to the

respondent/plaintiff. On payment to the respondent/plaintiff of such amount

operation of the impugned judgment and decree qua mesne profits is stayed

till further orders unless varied by the Court. This is however, without

prejudice to the rights of the appellant/defendant inasmuch as, the

appellant/defendant is aggrieved with respect to granting of a decree for

possession with respect to the tenanted premises.

13. Accordingly, limited to the aspect of mesne profits, and in

terms of the prima facie observations made above qua the mesne profits, let

notice issue to the respondent on filing of process fee, both in the ordinary

method as well as by registered AD post, returnable on 5th March, 2012.

Trial Court record be requisitioned. The amount in terms of today's

judgment be paid by the appellant/defendant to the respondent/plaintiff

within a period of 4 weeks from today.

14. The costs of ` 25,000/- in terms of order dated 8.11.2011 be

now deposited within one week from today.

VALMIKI J. MEHTA, J.

DECEMBER 19, 2011 ak