Cement Corporation Of India Ltd vs Mrs. Shobha Dikshit
2014 Latest Caselaw 6470 Del

$~11
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+    RFA 440/2014
                             Decided on 4th December, 2014

      CEMENT CORPORATION OF INDIA LTD       ..... Appellant
                  Through: Mr. Kailash Pandey and Mr. Chirag,
                           Advs.

                         versus

      MRS. SHOBHA DIKSHIT                             ..... Respondent

                   Through:           Mr. Naveen K Chaudhry, Adv.

CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK

A.K.PATHAK, J.(ORAL)

1. Respondent filed a suit for possession and recovery of mesne profits

against the appellant alleging therein that she had purchased the suit

property, that is, Flat No. 501 on the 5th Floor, C.C.I. House, 87, Nehru

Place, New Delhi admeasuring 530 square feet, more particularly shown in

yellow colour in the site plan, from the erstwhile owner. Appellant was

tenant of erstwhile owner. Thereafter, appellant attorned the tenancy in

favour of respondent and accepted her as landlord. Appellant started paying

monthly rent of `1590/- to respondent with effect from March, 1980.

However, no registered lease deed was executed between the parties.

Appellant increased the rent from time to time and the last paid rent in the

month of May, 2008 was `3749.12. Since respondent no longer desired the

appellant to continue as a tenant, she terminated the tenancy by serving a

legal notice dated 20th May, 2008 thereby calling upon the appellant to hand

over possession of the suit premises, on the expiry of 15 days of receipt of

notice. Appellant was also asked to pay market rent @ `200 per sq fee per

month amounting to `1.6 lacs per month in case of failing to deliver the

possession, on termination of tenancy. Interest @ 18 % per annum was also

claimed on the unpaid use and occupation charges.

2. Appellant admitted that it had been the tenant of respondent with

effect from 1st March, 1980. However, it was alleged that appellant was the

contractual tenant in terms of the Rent Agreement executed between the

parties for a period of three years. Further that tenancy stood renewed with

effect from 15th October, 2006 as there was no valid termination of tenancy

under the provisions of Transfer of Property Act, 1882 (for short hereinafter

referred to as the 'Act'). Appellant claimed that it was occupying the suit

property as a tenant vide lease deed dated 22nd September, 1979 executed

between the appellant and erstwhile owner; Subsequently, first tenancy

came into existence between the parties, on execution of Rent Agreement

dated 1st March, 1980. It was denied that tenancy was on month to month

basis. Appellant alleged that rent was increased to `3749.12 per month for a

period of three years with effect from 15th October, 2006, accordingly,

termination of tenancy vide notice dated 20th May, 2008 was illegal and

without any basis since respondent had no right to terminate the tenancy. It

was denied that appellant became unauthorised occupant with effect from 6th

June, 2008. It was prayed that suit be dismissed.

3. On an application under Order XII Rule 6 CPC filed by the

respondent a decree of possession was passed by the trial court against the

appellant on 18th May, 2010. It has been admitted that decree has since been

executed through the process of court and possession was taken through

court bailiff from the appellant on 30th September, 2010. Accordingly, only

question of determination of mesne profits remained pending before the trial

court. Opportunities were granted to the parties to lead evidence on the

point of quantum of mesne profits, for the period 7th June, 2008 to 30th

September, 2010. Respondent placed on record two lease deeds which have

been exhibited as Ex. PW1/8 and Ex. PW1/9 respectively. Both these lease

deeds pertain to properties adjoining to the suit property. The rate of rent as

mentioned in Ex. PW1/8 is `106 per sq feet; whereas rate of rent as

stipulated in Ex. PW1/9 is `85 per sq feet. Lease deed dated 27th October,

2006 (Ex. PW1/8) is in respect of a flat at second floor; whereas lease deed

dated 6th April, 2010 (Ex. PW1/9) is in respect of the flat at 10th floor.

Appellant did not lead any documentary evidence to counter the lease deeds

Ex. PW1/8 and Ex. PW1/9. In view of the documentary evidence, which

came on record, trial court has determined the rent as `100 per sq feet per

month for the period 7th June, 2008 up to 30th September, 2010 and has

directed the appellant to pay the same to respondent with interest @ 12 %

per annum.

4. Aggrieved by the decree of mesne profits appellant has preferred this

appeal.

5. Learned counsel for the appellant has contended that appellant was

not an unauthorised occupant in the suit property but was a contractual

tenant in terms of the Rent Agreement, thus, mesne profits could have been

awarded only from the date of decree of possession, that is, 18th May, 2010

till possession of the premises was taken over by the respondent through the

process of court. Mesne profits could not have been awarded from the date

of alleged termination of tenancy, that is, 7th June, 2008. He has placed

reliance on M/s Atma Ram Properties (P) Ltd. vs. M/s Federal Motors Pvt.

Ltd. (2004) Insc 751. I do not find any force in this contention of learned

counsel. Admittedly, no registered Lease Deed was executed between the

parties. Terms and conditions of an unregistered Rent Agreement cannot be

enforced by either of the parties. In absence of registered lease deed/rent

agreement the tenancy has to be treated on month to month basis. Section

107 of the Act envisages that lease of an immovable property for a term

exceeding one year can be made only by a registered instrument and not

otherwise. In this case, no registered rent agreement/lease deed was

executed; meaning thereby tenancy has to be taken on a month to month

basis terminable on the part of either lessor or lessee by 15 days' notice.

Section 106(1) of the Act provides that in the absence of a contract, lease of

an immovable property shall be deemed to be a lease from month to month

and which can be terminated either on the part of lessor or lessee by giving

15 days' notice unless it is a lease for agriculture or manufacturing purposes,

which shall be from year to year, terminable on the part of either lessor or

lessee by six months' notice. Accordingly, in this case, in absence of any

registered lease deed tenancy has to be taken from month to month and

could have been terminated by the appellant or by respondent by giving 15

days notice. Respondent terminated the tenancy by serving the notice dated

20th May, 2008 receipt whereof is not in dispute. Vide this notice tenancy

was terminated with effect from 6th June, 2008, thus, appellant became

unauthorised occupant of the suit property with effect from 7th June, 2008.

Accordingly, trial court has rightly awarded mesne profits with effect from

7th June, 2008 till suit property was vacated by the appellant. Judgment

relied upon by the learned counsel is in the context of different facts and is

not applicable to the facts of present case.

6. The next contention of learned counsel is that trial court has

erroneously assessed the mesne profits @ `100 per sq feet. I do not find any

force in this contention either. As mentioned hereinabove appellant has not

lead any evidence on the point of mesne profits. Appellant did not provide

any documentary evidence to show the prevalent market rate of rent in

respect of similarly situated properties. As against this, respondent has

proved two lease deeds of flats in adjoining properties. Indubitably, the best

evidence would be of the similar properties in the same building but in

absence thereof the rent prevalent in respect of the similar flats in adjoining

building will be the guiding factor to determine the market rate of rent in

respect of property in question. As per Ex. PW1/8 a flat in the adjoining

building was leased out in the year 2006 @ `106 per sq feet. This flat was

situated at the second floor. As regards to the property involved in Ex.

PW1/9, same was on the 10th floor and was leased out @ `85 per sq feet in

the year 2010. Trial court has not awarded the rent as mentioned in the lease

deed dated Ex. PW1/8 but has assessed the rent @ `100 per sq feet keeping

in mind both the lease deeds. In my view, rent determined by the trial court

is just, fair and equitable and needs no interference, more particulary since it

is based on documentary evidence. I do not find any illegality or perversity

in the view taken by the trial court.

7. However, I am of the view that trial court has erred in awarding

interest @ 12 % per annum; more so when while deciding Issue No. 6

relating to the interest, it was concluded by the trial court that award of

interest @ 9% per annum would be fair and equitable.

8. Accordingly, appeal is partially allowed. Mesne profits as awarded

by the trial court are upheld. However, rate of interest is reduced to 9% per

annum from 12 % per annum. Decree be drawn accordingly. The amount

lying deposited in this Court be released to respondent together with interest

accrued thereon, if any. Miscellaneous application is disposed of as

infructuous.

A.K. PATHAK, J.

DECEMBER 04, 2014 ga