Uoi vs Rajender Singh Sawhney
2012 Latest Caselaw 1777 Del

$~R-46
*   IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              Date of Decision: March 15, 2012

+                   FAO(OS) 227/2007

     UOI                                      ..... Appellant
              Represented by: Ms.Geeta Sharma with
                             Ms.Priya Singh, Advocates.

                    versus

     RAJENDER SINGH SAWHNEY            ..... Respondent

Represented by: Mr.Akshay Makhija, Adv.

CORAM:

HON'BLE MR. JUSTICE PRADEEP NANDRAJOG HON'BLE MS. JUSTICE PRATIBHA RANI

PRADEEP NANDRAJOG, J (Oral)

1. Heard learned counsel for the parties.

2. Jural relationship between the appellant and the respondent commenced, when the respondent let out property No.Z-9, Rajouri Garden, New Delhi, for purpose of setting up a CGHS dispensary, to the appellant vide lease-deed dated December 2, 1968 at a monthly rent of `1,250/-.

3. Duration of the lease being 5 years, was extended from time to time with mutual consent; increasing the monthly rent as well, and in this manner the parties last agreed for lease to be extended in the year 1994. The monthly lease rent agreed to was `34,915/- and the lease period stood extended upto the mid-night of August 27th and 28th, 1999.

4. As the lease expired by afflux of time on the mid-night of the date afore-noted, parties could not agree to mutual terms upon which the lease could be extended, resulting in the respondent issuing a legal notice dated September 22, 1999 calling upon the appellant to not only vacate the tenanted premises but additionally pay mesne profits @`30,000/- per month, in addition to the agreed rent. The agreed rent being `34,915/- per month, mesne profits claimed by the respondent would obviously be `64,915/- per month.

5. Since the appellant did not pay heed to the legal notice, the respondent was constrained to file a civil suit seeking ejectment of the appellant as also damages i.e. mesne profits on account of unauthorised occupation of the leased premises with effect from August 28, 1999.

6. Since the suit was resisted on the strength of an arbitration clause in the lease deed between the parties, appellant and the respondent ultimately got the suit disposed of, recording a statement made on behalf of the appellant that it would vacate the tenanted premises, of which it was continuing to occupy possession without legal authority, on the mid-night by February 27 and 28, 2005. It was also agreed between the parties that the issue of mesne profits be referred to an Arbitrator.

7. The appellant vacated the premises on February 27, 2005. Thus, what fell in the lap of the learned Arbitrator was the mesne profits which the appellant had to pay to the respondent for the period August 28, 1999 till February 27,

2005.

8. Before the learned sole Arbitrator, the respondent led evidence that property bearing Municipal No.J-2/15A, B.K.Dutt Market, Rajouri Garden, New Delhi had been let out at a monthly rent of `2,17,025/- pursuant to a lease-deed dated January 15, 2000.

9. As against that, the appellant relied upon a rent assessment figure determined by the Hiring Committee of CPWD which submitted its report on February 10, 2004 opining that upon the recognized principle of valuation of properties, fair monthly rent effective from August 28, 1999 would be `46,797/- per month and if fair rental was determined with reference to the prevailing market rent, the same would be `1,09,497/- per month.

10. The learned Arbitrator negated the evidentiary worth of the lease-deed pertaining to the property No.J-2/15A, B.K.Dutt Market, Rajouri Garden, New Delhi; holding that the said property was a commercial property in a market. The learned Arbitrator held that the subject property was a residential property. Accordingly, the learned Arbitrator determined the mesne profits with reference to the assessment made by the Hiring Committee of CPWD and in relation thereto, adopted the rental determined on the recognized principle of valuation. Thus, the learned Arbitrator held that the mesne profits payable would be `46,797/- per month.

11. A technical error crept into the award inasmuch as the mesne profits had to be determined for the period August 28,

1999 till February 27, 2005. The learned Arbitrator determined the mesne profits for the period August 27, 2001 till February 27, 2005.

12. The respondent filed objections to the award which have been disposed of by the learned Single Judge vide impugned order dated March 12, 2007 disposing of OMP No.85/2006 filed by the respondent herein.

13. The learned Single Judge has found fault with the legal reasoning adopted by the learned Arbitrator to determine the mesne profits with reference to the capitalized value of the property, holding that the correct principle to determine mesne profits had to be the market rate at which the property could be let out.

14. Though the learned Single Judge has not so specifically held, we do so, by stating that in a free economy, prices of commodities, lease rentals etc. are determined by market forces unrelated to the capital value of the goods or the property. Suffice would it be to state that the measure of mesne profits which an unauthorized occupant or an occupant whose initial entry was authorized but ceased to be unauthorized after period of permissive possession was over, would require the same to be determined on the principle of rent which the property could have fetched in the market.

15. The learned Single Judge has thereafter opined that the assessment by the Hiring Committee of CPWD that as per the prevailing market rental the mesne profits would be `1,09,497/- was the only evidence and thus has concluded that the

respondent would be entitled to mesne profits at said rate per month.

16. A technical error has been committed by the learned Single Judge as well, with reference to the dates.

17. The mesne profits had to be determined for the period commencing August 28, 1999 till February 27, 2005. The terminal date has been correctly noted by the learned Single Judge but the initial date, which ought to be August 28, 1999 has been wrongly noted by the learned Single Judge as February 28, 1999.

18. Thus, in appeal, the first corrective action required is to hold that the period for which mesne profits by way of damages would be awarded to the respondent would be August 28, 1999 ending February 27, 2005.

19. On the subject of mesne profits, learned counsel for the appellant has urged that the learned Single Judge has ignored the legal notice dated September 22, 1999 issued by the respondent, as per which the damages claimed would be `64,915/- per month. Counsel urges that the notice in question, being the condition precedent requirement of Section 80 of the Code of Civil Procedure, would bind the respondent to the sum which the respondent claimed by way of mesne profits.

20. Learned counsel for the respondent urges that if this be so, the respondent would be simply bound by the assertion of fact that as of September, 1999 measure of damages would be `64,915/- per month. Learned counsel highlights that under

Rule 12 of Order XX of the Code of Civil Procedure, in a suit for recovery of possession of immovable property and mesne profits, vide Clause (c) of sub-Rule 1 of Rule 12, mesne profits have to be determined with reference to an inquiry to be conducted and thus terminates the submission by urging that the mesne profits had to be determined over the spectrum of period, commencing from August 28, 1999 ending February 27, 2005. In this manner, counsel states that the Court would have to look at the matter as to what would be the average mesne profits payable by the appellant to the respondent.

21. Since there cannot be a measure of exactitude in the comparative assessment of two properties while determining the fair market rental of one in comparison with the other, for the reason various factors impact the rent which a willing tenant would pay to an informed landlord. Assuming that the plot size is the same and extent of construction is identical, the nature and quality of construction, location of the property, year of construction etc. would be determinative factors on basis whereof a willing tenant would offer the rent and an informed landlord would accept the same.

22. We have before us two pieces of evidence.

23. The first piece of evidence is the respondent's assertion in the legal notice dated September 22, 1999 that as of said date his property could fetch a monthly rent of `64,915/-. We also have the evidence in the form of the report of the Hiring Committee of CPWD which has assessed the prevailing market rent at `1,09,497/- per month.

24. Since the opinion of the Hiring Committee of the CPWD is not specific to the property in question, but is a general assessment of the prevailing market rent, Mr.Akshay Makhija, learned counsel for the respondent states that the best possible solution would be to determine the fair market rental for the spectrum period by resorting to the well recognized principle of mean average.

25. We agree.

26. We highlight once again that on a subject of fair market rental, exactness can never be achieved. Accordingly, we dispose of the appeal modifying the award as also the impugned order by directing that the mesne profits payable by the appellant to the respondent would be `87,500/- per month (the same has been calculated after rounding off the sum of `64,915/- to `65,000/- and the sum of `1,09,497/- to `1,10,000/- i.e. the total being `1,75,000/- and half thereof being `87,500/-).

27. The period for which damages @`87,500/- per month would be paid would be from August 28, 1999 till February 27, 2005.

28. Noting that under interim orders passed by this Court, the appellant has deposited the damages payable in terms of the impugned decision and out of which the respondent has been permitted to withdraw the sum calculated with reference to the damages being `46,797/- per month, we direct the Registry of this Court to encash the FDR pertaining to the balance sum lying in deposit and distribute the same between the appellant

and the respondent as per the present order.

29. We clarify that the rate at which interest on the damages has been awarded to the respondent by the learned Single Judge is maintained i.e. @6% per annum.

30. No costs.

PRADEEP NANDRAJOG (JUDGE)

PRATIBHA RANI (JUDGE)

MARCH 15, 2012 'dc'