Delhi High Court
M/S Federal Motors Pvt Ltd vs M/S Atma Ram Properties Pvt Ltd on 7 May, 2014
Author: Najmi Waziri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 07.05.2014
+ CM(M) 4/2014 & CM Nos.115-116/2014
M/S FEDERAL MOTORS PVT LTD ..... Petitioner
Through: Mr. Ravi Gupta, Sr. Adv. with
Mr. Yogender Vasisht, Adv.
versus
M/S ATMA RAM PROPERTIES PVT LTD ..... Respondent
Through: Mr. J.P. Sengh, Sr. Adv. with
Mr. Amit Sethi, Adv., Ms. Puja
Anand and Mr. Sachin Aneja,
Adv.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
% MR. JUSTICE NAJMI WAZIRI
1. The present petition under Article 227 of the Constitution of India
arises from the orders dated 29th April, 2013 ("first impugned
order") and 28th September, 2013 ("second impugned order")
(hereinafter collectively referred to as "impugned orders") of the
learned ADJ - 02 & Wakf Tribunal, New Delhi ("Appellate Court")
in ARCT No. 1 of 2011 (formerly RCA No. 279 of 2001) ("Appeal").
By the impugned orders, the learned Appellate Court directed the
petitioner/tenant herein to deposit an amount of Rs. 1,60,000/-
(Rupees one lakh sixty thousand only) per mensem towards user charges
of half portion of showroom no. 9, together with one bathroom at
ground floor, kolki and garages no. 12 and 13 of the Atma Ram
Mansion (formerly Scindia House) ("leased premises") pending
decision of the Appeal. The petitioner will hereafter be referred to as
the tenant and the respondent, as the landlord.
2. This Court would ordinarily, when called upon to exercise its
supervisory jurisdiction under Article 227, be reluctant to interfere in
CM(M) 4 of 2014 Page 1 of 45
such exercises of discretion - especially of an interim nature - by the
Appellate Court. However, owing to the nature of the averments
raised in the petition - specifically qua the issues of the maintainability
of the application giving rise to the impugned orders and of the
jurisdiction of the Appellate Court to have passed the impugned
orders - and given its peculiar circumstances this Court has heard the
matter.
3. The dispute between the parties, which has now survived two
decades and has also given rise to a judgement of the Supreme Court
- a locus classicus in itself,1 traces back to an eviction petition filed by
the landlord against the tenant in 1992 in respect of the leased
premises, which was under tenancy since about 1944. Filed under
section 14 (1) (b) of the Delhi Rent Control Act, 1958 ("Act"), the
petition was allowed on 19th March, 2001 and the tenant was directed
to vacate the leased premises in view of its having sub-let a part
thereof without permission from the landlord ("order of eviction").
4. A statutory appeal was preferred under section 38 of the Act to
challenge the order of eviction, which is admittedly pending final
hearing before the Appellate Court. Pertinently, when registering the
appeal and staying the order of eviction, the Appellate Court, by its
order of 12th April, 2001, directed the tenant inter alia to deposit an
amount of Rs. 15,000/- (Rupees fifteen thousand only) per mensem in
Court. The deposit was towards continued use and occupation
charges of the leased premises from the date of the order of eviction.
1 Atma Ram Properties Pvt. Ltd. v Federal Motors Pvt. Ltd., (2005) 1 SCC 705.
CM(M) 4 of 2014 Page 2 of 45
The stay was made conditional upon the deposit of the said amount,
over and above the rent at the contractual rate - which was to be paid
directly to the landlord. This imposition of condition for admission of
the appeal/staying of the impugned orders was challenged by the
tenant in this Court by CM (M) No. 280 of 2001. This Court, by its
order of 12th February, 2002, set aside the condition of deposit and
directed that the tenant may remain in the premises subject to his
paying the rent at the contractual rate to the landlord.
5. Aggrieved by the order setting aside the condition of deposit, the
landlord filed a petition seeking leave to appeal to the Supreme Court
under Article 136 of the Constitution of India, which leave was
granted. The judgement dated 10th December, 2004 in the resulting
Civil Appeal No. 7988 of 2004 - being the locus classicus earlier
adverted to - set aside the judgement dated 12th February, 2002 of
this Court and thus restored the condition of deposit of Rs. 15,000/-
(Rupees fifteen thousand only) per mensem for the stay of the order of
eviction to remain in force. While the reasoning of the Supreme
Court will be discussed in further detail at a more appropriate
juncture, it requires noticing herein that the Supreme Court held inter
alia that the doctrine of merger does not have the effect of postponing the date of
termination of tenancy merely because the decree of eviction stands merged in the
decree passed by the superior forum at a latter (sic: later) date.2
6. Thereafter, in 2007, the tenant sought to file an application under
order VI rule 17 of the Code of Civil Procedure, 1908 ("Code") in
2 Id., at para. 19 (3), p. 718.
CM(M) 4 of 2014 Page 3 of 45
the Appeal. When issuing notice upon the same to the landlord on
31st January, 2007, the Appellate Court suo motu directed the tenant to
deposit a monthly amount of Rs. 25,000/- (Rupees twenty five
thousand only), instead of Rs. 15,000/- (Rupees fifteen thousand
only). The Appellate Court, when passing the order of 31st January,
2007, observed that the amount of deposit ought to be increased in
view of the order of the Supreme Court and the increase in value of
the property. This order, admittedly, has not been challenged by the
tenant. Thereafter, by an order of 11th October, 2007, the learned
Appellate Court remanded the matter to the Trial Court directing it to
return its findings as to a particular matter the parties were at issue
on. While the particulars thereof are irrelevant for the present dispute,
by its judgement and order of 14th July, 2010, returned its finding on
the issue and the Appellate Court proceeded thereafter with the
Appeal.
7. On 5th November, 2011, the landlord moved an application under
order XLI rule 5 read with section 151 of the Code, seeking
directions to the tenant to deposit (a) Rs. 370/- (Rupees three
hundred seventy only) per square foot of half portion of the
showroom, and (b) Rs. 1,00,000/- (Rupees one lakh only) each for
the garages, from the date of the application till the disposal of the
appeal. The landlord had contended that it is in the interest of justice
that the amounts to be deposited be increased as prayed for. It was
submitted that the value of the leased premises has skyrocketed over
the years and the tenant is enjoying the same by depositing a meagre
amount of Rs. 25,000/- (Rupees twenty five thousand only). The
CM(M) 4 of 2014 Page 4 of 45
earnings from similarly placed premises was sought to be relied upon
to show both market rate of the leased premises as well as the steady
increase in the same.
8. The tenant had opposed the application and contended that (a) the
order of 12th April, 2001 whereby the tenant was directed to deposit
Rs. 15,000/- (Rupees fifteen thousand only) had merged with the
order of the Supreme Court and hence cannot be modified by the
Appellate Court; (b) that even the order of 31st January, 2007 whereby
the amount was increased from Rs. 15,000/- (Rupees fifteen
thousand only) to Rs. 25,000/- (Rupees twenty five thousand only) is
without jurisdiction; (c) the documents indicating earnings from
similarly placed premises are irrelevant as they are collusive and not
binding on the tenant; (d) the increase in rent cannot be made
unilaterally by the landlord contrary to the provisions of section 6A
of the Act; (e) the landlord had already filed a similar application in
the past and is hence precluded from filing the present application;
and (f) the purpose of order XLI rule 5 of the First Schedule to the
Code is to secure the interest of the parties and hence enhancement
of the amount of deposit cannot be sought.
9. By the first impugned order, the Appellate Court held that the
application is maintainable but directed that appropriate documents
supported by an affidavit be filed for calculating market value of the
leased premises. It reasoned:
9.1. The doctrine of merger qua orders challenged in appeal is not
of universal application; it would apply only where the superior
CM(M) 4 of 2014 Page 5 of 45
court has dealt with the issue that the lower Court has
adjudicated upon.
9.2. The order of the Supreme Court only dealt with the issue of
whether the Appellate Court had jurisdiction to impose the
condition of a deposit while admitting an appeal; it did not
consider the issue of quantum of deposit.
9.3. Hence, the order of the Appellate Court qua quantum of
deposit does not merge with the order of the Supreme Court.
9.4. Judgements regarding section 6A of the Act would have no
relevance in the present matter as the landlord has not
increased the rent unilaterally before filing the suit.
9.5. The record bears out that the landlord has not filed any
application in the past seeking the same or similar relief.
9.6. The issue involved is not of maintainability of the application,
but of the power of the court to enhance the amount to be
deposited.
9.7. From the judgement of this Court in Dhruv Goel v Anand
Parkash Goyal,3 it is evident that the Appellate Court has power
to enhance the amount to be deposited; the reasoning therefor
can be found in the order of the Supreme Court itself.
9.8. While it is doubtless that the purpose of Order XLI rule 5 of
the Code is to secure the interests of the parties, the interest of
the parties may change over time.
9.9. The tenant has enjoyed use of the property since the order of
eviction at a nominal cost of Rs. 15,000/- (Rupees fifteen
3 Judgement dated 19th March, 2010 in CS (OS) 420 of 1982.
CM(M) 4 of 2014 Page 6 of 45
thousand only) per mensem for the first six years and of Rs.
25,000/- (Rupees twenty five thousand only) per mensem for the
next six years, over and above the admitted rent of about Rs.
300/- (Rupees three hundred only).
9.10. The value of the property would doubtless have increased
manifold owing to the lapse of time.
9.11. The principles and objectives laid down by the Supreme Court
when upholding the power of the Appellate Court to impose
the condition of deposit of use and occupation charges applies
pro tanto to increase of use and occupation charges.
9.12. The application seeking increase of the amount of security
deposit is therefore maintainable.
10. As earlier observed, the first impugned order had, while holding that
the application seeking increase of the amount of deposit was
maintainable had directed both parties to file appropriate documents
supported by affidavits to show the prevailing rate of rent in the
immediate vicinity generally. It observed that the landlord had merely
filed documents and other agreements that it had entered into with
other parties, but has not filed any affidavit in support thereof. It
observed further that the tenant has not filed any documents or
affidavit in this regard. In these circumstances, directions were issued
to file further material. Following this, the landlord had filed an
affidavit in addition to the agreements already filed by it and the
tenant filed an affidavit, but did not file any documents. Thereafter,
the parties were heard qua the issue of the quantum by which the
deposit ought to be increased.
CM(M) 4 of 2014 Page 7 of 45
11. The tenant contended against maintainability of the application and
need for an enhancement. Both issues were refused to be considered
by the Appellate Court at this stage as the first impugned order had
already dealt with the same in extenso. The landlord had set out in its
affidavit the relative merit of the leased premises in view of its
location as well as amenities available nearby. It had brought on
record the agreements entered into with other merchants in the same
building, and supported the same with due averments in the affidavit
earlier adverted to. Based on the agreements, the landlord contended
that the other properties in the building are fetching it income in the
range of Rs. 279/- (Rupees two hundred seventy nine only) and Rs.
420/- (Rupees four hundred twenty only) per square foot per mensem.
The landlord had further contended that the garages are capable of
earning Rs. 1,00,000/- (Rupees one lakh only) per mensem. The tenant
opposed reliance on the said agreements, contending that the same
have been entered into after the disputes have arisen between the
parties and are false/collusive documents prepared by the landlord
merely to create an illusion of high value of the property. The tenant
had further contended that since the infrastructure status and facilities
provided/available to the tenants of the premises under the said
agreement was not known, the same cannot be considered to
ascertain market value of the leased premises.
12. The second impugned order rejected the contention of the tenant qua
the inadmissibility of the agreements entered into by the landlord
with the other merchants in the same building. It observed that it is
CM(M) 4 of 2014 Page 8 of 45
inconceivable that a business house would enter into registered lease
deeds with inflated rent values merely at the instance of the landlord
and that the contention to the contrary inspires no confidence. It
observed further that the premises are the closest available premises
to the leased premises for the purpose of comparison, being located
in the same building. It observed that the tenant cannot be heard to
contend that the particulars of infrastructure status and facilities
provided/available in the said premises are unknown, given that they
are located in the same building. It observed that if the tenant had
desired to contend that the infrastructure or facilities provided to
these premises are in any way different from what is provided to the
tenant, the tenant ought to have taken steps to ascertain the same and
state as much in its affidavit. It remarked particularly on the complete
lack of particulars or assistance from the tenant qua the market value
of the leased premises. It observed that the tenant has, in any case,
not impugned the agreements on the basis that the premises have not
been let out to the entity mentioned in the agreements, or that the
businesses stated to be run from the said premises are not actually
being so run therefrom.
13. The second impugned order observed that the landlord has shown
that the leased premises are likely to fetch income in the range of Rs.
279/- (Rupees two hundred seventy nine only) and Rs. 420/- (Rupees
four hundred twenty only) per square foot per mensem. It observed that
in view of the wide range and the possibility of variation on account
of the facilities provided, the lower of the two figures ought to be
considered as the income the leased premises is likely to fetch. It
CM(M) 4 of 2014 Page 9 of 45
rejected the contention that the garages are likely to fetch Rs.
1,00,000/- (Rupees one lakh only) each per mensem as being
unsupported by any evidence or material. It held, however, that
owing to their accessibility and location, they are likely to fetch at
least Rs. 25,000/- (Rupees twenty five thousand only) each per mensem.
It took into consideration the submission that the landlord seeks only
fifty percent of the market rate, on the basis of the trend in recent
decisions of the Supreme Court. On the above basis, the second
impugned order directed the tenant to deposit an amount of Rs.
1,60,000/- (Rupees one lakh sixty thousand only) per mensem, as use
and occupation charges for the portion of the showroom and the two
garages.
14. The propriety or otherwise of the impugned orders are now in
dispute before this Court and this Court took time to consider.
However, this Court was mindful of the dictum of the Supreme Court
in Surya Devi Rai v Ram Chander Rai & Ors.,4 where, relying to a wide
range of authorities on the issue,5 including the dicta of the Supreme
Court in Waryam Singh v Amarnath,6 the Supreme Court warned
against the indiscriminate exercise of the power of superintendence
under the supervisory jurisdiction of the Court under Article 227.
4 (2003) 6 SCC 675.
5 Corpus Juris Secundum (Vol. 14, p. 121); Administrative Law, 8th Edn., p. 591; Ryots of Garabandho v
Zamindar of Parlakimedi, AIR 1943 PC 164 : 70 IA 129; Hari Vishnu Kamath v Ahmad Ishaque, AIR 1955
SC 233 : (1955) 1 SCR 1104; Custodian of Evacuee Property v Khan Saheb Abdul Shukoor, AIR 1961 SC
1087 : (1961) 3 SCR 855; Nagendra Nath Bora v Commr. of Hills Division and Appeals, AIR 1958 SC 398 :
1958 SCR 1240; T.C. Basappa v T. Nagappa, AIR 1954 SC 440 : (1955) 1 SCR 250; Satyanarayan
Laxminarayan Hegde v Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137 : (1960) 1 SCR 890; Umaji
Keshao Meshram v Radhikabai, 1986 Supp SCC 401; Chandrasekhar Singh v Siya Ram Singh, (1979) 3 SCC
118 : 1979 SCC (Cri) 666.
6 AIR 1954 SC 215 : 1954 SCR 565.
CM(M) 4 of 2014 Page 10 of 45
Pertinently, in its summary, which was quoted with approval by the
Supreme Court more recently in Sameer Suresh Gupta v Rahul Kumar
Agarwal,7 it observed:8
"38. Such like matters frequently arise before the High Courts. We sum up our
conclusions in a nutshell, even at the risk of repetition and state the same as hereunder:
***
(4) Supervisory jurisdiction under Article 227 of the Constitution is
exercised for keeping the subordinate courts within the bounds of their
jurisdiction. When a subordinate court has assumed a jurisdiction which
it does not have or has failed to exercise a jurisdiction which it does have
or the jurisdiction though available is being exercised by the court in a
manner not permitted by law and failure of justice or grave injustice has
occasioned thereby, the High Court may step in to exercise its supervisory
jurisdiction.
(5) Be it a writ of certiorari or the exercise of supervisory jurisdiction,
none is available to correct mere errors of fact or of law unless the
following requirements are satisfied: (i) the error is manifest and apparent
on the face of the proceedings such as when it is based on clear ignorance
or utter disregard of the provisions of law, and (ii) a grave injustice or
gross failure of justice has occasioned thereby.
(6) A patent error is an error which is self-evident i.e. which can be
perceived or demonstrated without involving into any lengthy or
complicated argument or a long-drawn process of reasoning. Where two
inferences are reasonably possible and the subordinate court has chosen to
take one view, the error cannot be called gross or patent.
(7) The power to issue a writ of certiorari and the supervisory jurisdiction
are to be exercised sparingly and only in appropriate cases where the
judicial conscience of the High Court dictates it to act lest a gross failure
of justice or grave injustice should occasion. Care, caution and
circumspection need to be exercised, when any of the abovesaid two
jurisdictions is sought to be invoked during the pendency of any suit or
proceedings in a subordinate court and the error though calling for
correction is yet capable of being corrected at the conclusion of the
proceedings in an appeal or revision preferred thereagainst and
entertaining a petition invoking certiorari or supervisory jurisdiction of
the High Court would obstruct the smooth flow and/or early disposal of
the suit or proceedings. The High Court may feel inclined to intervene
where the error is such, as, if not corrected at that very moment, may
become incapable of correction at a later stage and refusal to intervene
7 (2013) 9 SCC 374.
8 Surya Devi Rai v Ram Chander Rai & Ors., supra, n. 4, at p. 694-696.
would result in travesty of justice or where such refusal itself would result
in prolonging of the lis.
(8) The High Court in exercise of certiorari or supervisory jurisdiction
will not convert itself into a court of appeal and indulge in reappreciation
or evaluation of evidence or correct errors in drawing inferences or correct
errors of mere formal or technical character.
***"
(Emphasis supplied)
15. The Supreme Court, in conclusion, clarified that the injunction is not
from exercising power under Article 227 in any case whatsoever, but
to exercise the same sparingly and to correct errors of moment that
need immediate attention. It held:9
"39. Though we have tried to lay down broad principles and working rules, the fact
remains that the parameters for exercise of jurisdiction under Articles 226 or 227 of the
Constitution cannot be tied down in a strait-jacket formula or rigid rules. Not less than
often, the High Court would be faced with a dilemma. If it intervenes in pending
proceedings there is bound to be delay in termination of proceedings. If it does not
intervene, the error of the moment may earn immunity from correction. The facts and
circumstances of a given case may make it more appropriate for the High Court to exercise
self-restraint and not to intervene because the error of jurisdiction though committed is yet
capable of being taken care of and corrected at a later stage and the wrong done, if any,
would be set right and rights and equities adjusted in appeal or revision preferred at the
conclusion of the proceedings. But there may be cases where "a stitch in time would save
nine". At the end, we may sum up by saying that the power is there but the exercise is
discretionary which will be governed solely by the dictates of judicial conscience enriched by
judicial experience and practical wisdom of the judge."
(Emphasis supplied)
16. Thus, with the consent of the learned Senior Advocates appearing for
the parties, the matter has been heard finally at this stage, but solely
to identify whether the impugned orders is of such a nature as to
warrant exercise of this discretionary power of superintendence that
the Supreme Court has consistently warned against lightly exercising.
9 Id., at p. 696.
As to Section 6A of the Act
17. Mr. Ravi Gupta, learned Senior Advocate appearing for the tenant,
contended that the present matter is, indeed, one rightly deserving
interference with under Article 227. He contended that the
application by the landlord is nothing short of a unilateral attempt by
the landlord to increase the rent payable qua the leased premises - an
exercise prohibited by law. He contended that the provisions of the
Act, specifically sections 6 and 6A thereof specifically disentitles the
landlord from unilaterally increasing the rent payable qua the
premises. He contended that an onerous condition - which is the
expression sought to be assigned to the condition imposed by the
impugned orders - cannot be imposed on the tenant, which is
exercising its statutory right of appeal. He contended that the
principles laid down for increase of rent under section 6A of the Act
have been given a complete go by in the impugned orders. He
contends that a wholly arbitrary figure has been specified as the
amount to be deposited, without any regard to the mandate of the
law. He submits that on this ground alone, the impugned orders
deserve to be set aside as being in excess of law. He placed reliance
on the judgement of the Supreme Court in Niyas Ahmad Khan v
Mahmood Rahmat Ullah Khan & Anr.10 in support of his contention.
18. The premise of this contention is, in the opinion of this Court,
somewhat misplaced. It must be clarified that the pronouncement in
Atma Ram Properties Pvt. Ltd. v Federal Motors Pvt. Ltd.,11 was not that
10 (2008) 7 SCC 539.
11 Supra, n. 1.
the Court may direct payment of rent over and above the contractual
or standard rent before staying the order of eviction. To the contrary,
the judgement of the Supreme Court was that as the tenancy comes
to an end upon the pronouncement of order of eviction, a reasonable
sum may be directed to be deposited as use and occupation charges during
pendency of the appeal. The provisions of sections 6 and 6A of the
Act would have no applicability in determination of such charges.
Rather, it would not be wholly incorrect to state that none of the
provisions of the Act would apply to govern the relationship between
the parties, for the tenancy comes to an end upon the order of
eviction being passed.12 Given the same, the present contention on
behalf of the tenant hardly inspires any confidence in the mind of the
Court.
19. The pronouncement in Niyas Ahmad Khan v Mahmood Rahmat Ullah
Khan & Anr.,13 would have no application in the present case for the
reason that the facts of that case were diametrically opposite to the
present case. In the said case, the landlord had initiated proceedings
under section 21 (1) (a) of the Uttar Pradesh Urban Buildings
(Regulation of Letting, Rent and Eviction) Act, 1972 against the
tenant, but was unsuccessful in the same. Even in the appeal
12 17. In the Delhi Rent Control Act, 1958, the definition of a "tenant" is contained in clause (l) of
Section 2. Tenant includes "any person continuing in possession after the termination of his tenancy"
[Section 2(l)(ii)] and does not include "any person against whom an order or decree for eviction has
been made" [Section 2(l)(A)]. This definition is identical with the definition of tenant dealt with by this
Court in Chander Kali Bai case [(1977) 4 SCC 402]. The respondent tenant herein having suffered an
order for eviction on 19-3-2001, his tenancy would be deemed to have come to an end with effect
from that date and he shall become an unauthorised occupant. It would not make any difference if the
order of eviction has been put in issue in appeal or revision and is confirmed by the superior forum at
a latter (sic) date. The date of termination of tenancy would not be postponed by reference to the
doctrine of merger. [Atma Ram Properties Pvt. Ltd. v Federal Motors Pvt. Ltd., supra n. 1, at p. 717].
13 Supra, n. 10.
therefrom, the landlord was unsuccessful and the matter was
thereafter taken to the Allahabad High Court under Articles 226 and
227 of the Constitution of India. The Allahabad High Court had
directed payment of an amount of Rs. 12,050/- (Rupees twelve
thousand fifty only) as rent by the tenant to the landlord pending
decision of the writ petition. It is in the aforesaid fasciculus of facts,
and given that there was no order of eviction against the tenant
therein that the Supreme Court deemed it appropriate to set aside the
order of the Allahabad High Court. The same would have no
applicability to the present case. A Bench of three judges of the
Supreme Court that was called upon to clarify the apparent difference
of opinion between Atma Ram Properties Pvt. Ltd. v Federal Motors Pvt.
Ltd.,14 and Niyas Ahmad Khan v Mahmood Rahmat Ullah Khan & Anr.,15
gave a similar opinion.16
As to res judicata and maintainability of the application
20. Mr. Gupta then contended that the application is per se not
maintainable. This he contends on the basis that the issue of the
tenant being put to terms was already considered and decided by the
Appellate Court when it issued notice on the application under Order
XLI rule 5. He submitted that there can be no review of the order
already passed by the Appellate Court on 12th April, 2001. He
contended that even the order of 31st January, 2007 whereby the
amount fixed on 12th April, 2001 of Rs. 15,000/- (Rupees fifteen
14 Supra, n. 1.
15 Supra, n. 10.
16 State of Maharashtra & Ors. v Supermax International Private Limited & Ors., (2009) 9 SCC 772, at para.
13, p. 778.
thousand only) per mensem was without jurisdiction, but the tenant had
bona fide complied with the same in the hope and belief that the appeal
would soon be heard finally and disposed off. He submitted that the
Appellate Court, once it has considered and passed an order on the
issue of deposit to be made under Order XLI rule 5, cannot reopen
the issue, whether on its own motion or on application by a party.
This, he submits, is in view of the fact that Order XLI rule 5 is for
the purpose of protecting the interest of the parties, not to further the
interest of one party to the detriment of the other. He contends that
neither was the application maintainable, nor was the order directing
enhancement of the deposit amount specified in the order of 12 th
April, 2001 maintainable. He lastly contended that the reliance placed
on the judgements of the Supreme Court in Crompton Greaves Ltd v
State of Maharashtra,17 and Anderson Wright & Co v Amar Nath Roy &
Ors.,18 to hold that the judicial trend has changed to the extent that
even market rate may be imposed as user charges was incorrect. He
submitted that inasmuch as these judgements do not set out the
reasons why the final order was passed, they cannot be regarded as
authoritative pronouncements.
21. In response, Mr. J. P. Sengh, learned Senior Advocate appearing on
advance notice on behalf of the landlord, contended that the
application would indeed be maintainable and that there was no
infirmity in the impugned orders. He relied extensively on the dictum
of the Supreme Court in Atma Ram Properties Pvt. Ltd. v Federal Motors
17 (2005) 11 SCC 547.
18 (2005) 6 SCC 489.
Pvt. Ltd.,19 and contended that the issue of the liability - to pay user
charges - of the tenant who seeks to remain in the property after the
order of eviction is no longer res integra. He contended that the tenant
who continues in the property after the order of eviction stays at the
sufferance of the landlord and ought to not be allowed to enjoy the
premises at the contractual rate of rent. He further relied on the
judgements of the Supreme Court in the case of Crompton Greaves Ltd
v State of Maharashtra,20 as well as Anderson Wright & Co v Amar Nath
Roy & Ors.,21 to contend that the principle laid down in Atma Ram
Properties Pvt. Ltd. v Federal Motors Pvt. Ltd.,22 was reaffirmed by
subsequent judgements in relation to rent control laws even in other
states. He submitted that these judgements clearly establish the power
of the Court to impose conditions for the stay of the order of
eviction and the power of the Court to consider the material
submitted by the parties to come to a conclusion as to the rent to be
paid. He thereafter drew attention of the judgement of the Supreme
Court in Mohammad Ahmad & Anr. v Atma Ram Chauhan & Anr.,23 as
an illustrative instance where the Supreme Court had upheld the
enhancement - on application by the landlord - of the interim user
charges payable.
22. The contentions of the tenant as to the power of the Appellate Court
to review the order of 12th April, 2001 are irrelevant in the present
circumstances. The Appellate Court has not passed the impugned
19 Supra, n. 1.
20 Supra, n. 17.
21 Supra, n. 18.
22 Supra, n. 1.
23 (2011) 7 SCC 755.
orders under Section 114, read with Order XLVII of the Code. Nor
has the Appellate Court purported to have reviewed the earlier order by
the impugned orders. At the root of the contention of the tenant is
the doctrine of res judicata. That the doctrine's boundaries far exceed
the scope of section 11 of the Code is a well established principle as
seen from the judgement of a Bench of three judges of the Supreme
Court in S. Pl. Narayanan Chettiar v M. Ar. Annamalai Chettiar.24 That
the principle of res judicata would apply to the same proceedings at
different stages is also the undisputable position in law.25 However,
whether this wide ambit can be extended to contend that once an
amount of security and/or deposit has been set under Order XLI rule
5 it cannot be subsequently modified, is in issue.
23. While the judgement of the Supreme Court in Mohammed Ahmad &
Anr. v Atma Ram Chauhan & Anr.26 appears at first blush to answer
this issue in favour of the landlord, it may not be wholly apposite to
decide the present issue on the basis of the said judgement for two
reasons. Firstly, the issue of applicability of the doctrine of res judicata
to orders under Order XLI rule 5 was not directly in issue therein; it
appears to have considered only the issue of whether the
enhancement of the amount of deposit under Order XLI rule 5 was
justified. Secondly, the judgement seems to indicate that the Supreme
Court has proceeded on a concession made by the tenant therein as
to maintainability of the proceedings and as to power of the Court to
enhance the deposit, and the Supreme Court has cited the same as the
24 1959 Supp (1) SCR 237 : AIR 1959 SC 275.
25 Satyadhyan Ghosal & Ors. v Deorajin Debi (Smt.) & Anr., (1960) 3 SCR 590 : AIR 1960 SC 941.
26 Supra, n. 23.
reason for not looking into precedents or the law qua the same.27 In
other words, being decided on its peculiar facts and having not
considered the issue, the judgement may not be considered as a
binding precedent qua the issue of applicability of the principle of res
judicata to orders passed under Order XLI rule 5 of the Code.
24. However, this cannot be read to mean that the Appellate Court is,
indeed, barred by res judicata from passing an order in the nature of
the impugned orders. That res judicata as a salutary principle of law
ought to apply to ensure that a sense of finality is attached to judicial
orders is well established. Indeed, it is based on three irrefutable
principles, both of private law: (a) Nemo debet bis vexari pro una et eadem
causa,28 and of public law: (b) Res judicata pro veritate accipitur29 and
interest reipublicae ut sit finis litium.30 However, to apply this ipse dixit to
every order would run counter to the very intent of the rule. A rule
that, by its very nature, is intended to provide finality to judicial
orders, ought to not lightly be applied to interim
arrangements/orders.
25. That not all interlocutory orders ought to not be subject to the
rigours of res judicata is a principle not merely of convenience in
27 The Court observes in paragraph 14 of the report: 14. A critical scrutiny of the aforesaid
judgments/orders would show that in these cases neither was there any offer made by the landlord
nor any corresponding acceptance by the tenant, still the High Courts, in each of these cases, had
enhanced the rates of rent unilaterally. But in the case in hand it is clearly reflected that the respondent
landlords made an offer to the appellants/tenants to which they agreed, only thereafter the rent was
enhanced from Rs 600 per month to Rs 2100 per month, for both the shops. Thus, the ratio of the
aforesaid judgments cited by the learned counsel for the appellants has no application to the facts of
the present case. (Emphasis supplied) [Ibid. at p. 759].
28 Latin: No one should be tried twice for one and the same cause.
29 Latin: A matter decided is accepted as correct.
30 Latin: It is in the interest of the Commonwealth that there be an end to litigation.
administration of justice, but also of a long standing, well established
and judicially as well as a legislatively recognised rule of law. The basis
for this is that interlocutory orders, as recognised by the Supreme
Court in Arjun Singh v Mohindra Kumar & Ors.,31 may also be designed
to maintain status quo or preserve property pending the delay of the
adjudicatory process, or to ensure the just, smooth, orderly and
expeditious disposition of the suit.
26. These orders cannot be subject to the principle of res judicata, being
not final and being amenable to further modification. These orders
would doubtless not be modified without sufficient cause for such
modification by the Court - either on its own motion or upon
application by the party. However, the same cannot be construed to
mean that the bar is due to res judicata. The second and/or successive
application/s will be rejected - as the Supreme Court in Arjun Singh v
Mohindra Kumar & Ors.32 held either as an abuse of process of law or
for the same reasons on which the earlier application be done - on
general principles of law analogous to res judicata.33
27. The inapplicability of res judicata to interlocutory orders amenable to
alteration was also recognised by the legislature in the first part of the
fourth explanation to section 13 of the Code of Civil Procedure,
1882, which provided for res judicata.34 What needs consideration
31 AIR 1964 SCC 993, at para. 13, p. 1001 : [1964] 5 SCR 946, at p. 960.
32 Id., at para. 13, p. 1001 : pp. 960-961.
33 Ram Kripal Shukul v Mussummat Rup Kuari, (1883) 6 All. 269 (PC).
34 Explanation IV. - A decision is final within the meaning of this section when it is such as the Court
making it could not alter (except on review) on the application of either party or reconsider of its own
motion. A decision liable to appeal may be final within the meaning of this section until the appeal is
made.
when applying the rule to interlocutory orders is borne out from the
Explanation IV itself - whether the Court would have the power to
alter the order de hors an application for review. This is also indicative
of the legislative intent in the Code of Civil Procedure to empower
Courts to alter certain interlocutory orders, i.e., those that have not
attained finality. It is in this context that the Supreme Court, in Arjun
Singh v Mohindra Kumar & Ors.,35 after discussing the principle of res
judicata as enunciated in Satyadhyan Ghosal & Ors. v Deorajin Debi (Smt.)
& Anr.,36observed:
"(11) We agree that generally speaking, these propositions are not open to objection. If the
court which rendered the first decision was competent to entertain the suit or other
proceeding, and had therefore competence to decide the issue or matter, the circumstance
that it is a tribunal of exclusive jurisdiction or one from whose decision no appeal lay
would not by themselves negative the finding on the issue by it being res judicata in latter
proceedings. Similarly, as stated already, though S. 11 of the Civil Procedure Code clearly
contemplates the existence of two suits and the finding in the first being res judicata in the
later suit, it is well established that the principle underlying it is equally applicable to the
case of decisions rendered at successive stages of the same suit or proceeding. But where the
principle of res judicata is invoked in the case of the different stages of proceedings in the
same suit, the nature of the proceedings, the scope of the enquiry which the adjectival law
provides for the decision being reached, as well as the specific provisions made on matters
touching such decision are some of the material and relevant factors to be considered before
the principle is held applicable."
(Emphasis supplied)
28. The impugned orders draw reference to the said judgement in Arjun
Singh v Mohindra Kumar & Ors.,37 and hold that orders under Order
XLI rule 5 are amenable to subsequent modification. It observes that
an order under Order XLI rule 5 is passed to protect the interest of
the parties and the "interest of the parties" may change with the
passage of time. Consequently, the impugned orders proceeded to
35 Supra, n. 31, at pp. 999-1000 : at pp. 957-958.
36 Supra, n. 25.
37 Supra, n. 31.
enhance the amount of deposit in the manner earlier rehearsed. This
Court finds no impropriety in the same as to warrant interference.
Although the impugned orders have not entered upon the inquiry as
to why the order of deposit under Order XLI rule 5 is immune from
the principle of res judicata, the conclusion it had come to was not
incorrect.
29. An order imposing a condition of deposit at the time of granting stay
of the decree appealed from is an order in equity, not in law.38 The
condition is imposed to afford reasonable compensation to the party
successful at the end of the appeal. The purpose of the order is not to
put an end to the proceedings or decide any of the controversies in
issue. To the contrary, it is fashioned solely to ensure that the
successful party in the Trial Court is not unduly deprived of the fruits
of the decree; it is secured merely because of the delay that the
appeal's adjudication is bound to take. Neither is the grant of the stay
(or, as a corollary, the refusal thereof), nor are the conditions imposed
therefor intended to conclusively determine any issue between the
party. Even the inquiry that the Court undertakes to make a
determination of the quantum of the deposit is of a summary nature
- being usually done on the basis of affidavits filed by the parties
and/or submissions of the Counsel for the parties. This is in view of
the fact that the condition has to be imposed alongwith the stay; the
stay will not operate unless the conditions are fulfilled. Given the
same, the Court could hardly initiate a detailed trial with witnesses
being summoned to ascertain the question of whether the stay ought
38 Supra, n. 1, at p. 713.
to be granted with or without conditions. An order under Order XLI
rule 5 is, in the opinion of the Court, doubtless an interlocutory order
to which the rigours of res judicata cannot apply.
30. This Court finds support in the above conclusion by two factors;
firstly, as far as it can ascertain, the issue of an order under Order
XLI rule 5 being subject to res judicata was considered only in one
judgement, and secondly, the Andhra Pradesh High Court rejected
the plea in the said case. The case, Bathini Syam Prasad v Bathini
Mastanamma & Anr.,39 found CHANDRA REDDI J. (as he then was)
tracing out the very law that the Supreme Court would reiterate ten
years later in Arjun Singh v Mohindra Kumar & Ors.,40 - that the Court
has the inherent power to modify certain interlocutory orders ex debito
justitiae.41 He found support in this view from the order of
RANGNEKAR J. of the Bombay High Court in Yusuf IA Lalji & Ors. v
Abdullabhoy Lalji & Ors. (No. 1),42 the commentary of Sir D. F. Mulla
on the Code,43 and the commentary of Mr. S. C. Sarkar on the Code.44
The said commentaries, in turn placed reliance on the judgement of
SIR JOHN EDGE C.J. (as he then was) of the Allahabad High Court in
Amir Hasan v Ahmad Ali,45 where the issue of the appellate Court's
power to review an order staying execution was considered. The
learned judge, in the said case, held that the order granting stay could
39 AIR 1954 Andh. 40.
40 Supra, n. 31.
41 Bathini Syam Prasad v Bathini Mastanamma & Anr., Supra, n. 31, at p. 43.
42 AIR 1930 Bom. 294, at p. 295.
43 Sir Dinshaw Fardunji Mulla, The Code of Civil Procedure (Twelfth Edition, edited by Sir Rupendra
Coomar Mitter, Eastern Law House Ltd., Calcutta, 1953) at p. 1191.
44 SC Sarkar, The Law of Civil Procedure in India & Pakistan (Third Edition, SC Sarkar & Sons Ltd.,
Calcutta, 1954) at p. 871.
45 (1887) ILR IX All. 36.
indeed be reviewed under section 623 of the Code of Civil Procedure,
188246 and proceeded to set aside the stay granted therein.
31. CHANDRA REDDI J. observed47 that while the judgement of the
Judicial Committee of the Privy Council in Chajju Ram v Neki &
Ors.,48 on Order XLVII rule 1 of the Code precludes a review of the
nature contemplated in Amir Hasan v Ahmad Ali,49 the learned
commentators earlier alluded to have nonetheless deemed it
appropriate to consider the said judgement of the Allahabad High
Court an authority for the proposition of amenability of an order
under Order XLI rule 5 of the Code to alteration. Relying on this as
well as the opinion of RANGNEKAR J. in Yusuf IA Lalji & Ors. v
Abdullabhoy Lalji & Ors. (No. 1),50 CHANDRA REDDI J. concurred with
the final order in Amir Hasan v Ahmad Ali51 and held that an order
under Order XLI rule 5 is doubtless not a final order and would be
amenable to alteration.
32. Mr. Gupta placed reliance on the judgement of a learned single judge
of this Court in Ram Singh & Ors. v Sohinder Singh Bedi,52 to contend
that once an application under Order XLI rule 5 is made and the
Court, after consideration thereof, has imposed certain conditions
subject to which the order appealed from was to be stayed, there is a
bar upon the re-agitation of the same issue by filing a further
46 Id., at p. 40-41.
47 Bathini Syam Prasad v Bathini Mastanamma & Anr., Supra, n. 39, at p. 43.
48 AIR 1922 PC 112.
49 Supra, n. 45.
50 Supra, n. 42, at p. 295.
51 Supra, n. 45.
52 2010 (118) DRJ 510.
application. He contends that the said judgement clearly lays down
that once an appellate court comes to a conclusion that no security
needs to be furnished by the appellant, the appropriate remedy for
the aggrieved respondent is by way of an appeal. He further contends
that should this Court arrive at a conclusion different from the
observations of the learned Single Judge in the said judgement,
judicial discipline dictates that it ought to refer the matter to a larger
bench for deciding the issue.
33. While it is indisputable that judicial discipline requires this Court to
refer the issue to a larger bench if it differs in its opinion from those
of a coordinate or larger bench on the same question of law, the
present matter does not require any such exercise being undertaken.
The said judgement of Ram Singh & Ors. v Sohinder Singh Bedi53 is
clearly distinguishable in the issue of law before it from the matter
before this Court. The said matter did not require the attention of the
Court being directed towards the issue of whether an order made
under Order XLI rule 5 of the Code is subject to res judicata. The said
matter was not concerned with the issue of whether a Court is
prohibited from imposing fresh conditions under Order XLI rule 5 of
the Code if fresh facts are brought before it; indeed, no new facts
were pleaded before it. To the contrary, the only reason given for
invoking Order XLI rule 5 for a second time in the said case was that
the Court therein had ignored the legislative mandate by not requiring
the appellant to furnish security for stay of the impugned order.54 The
53 Ibid.
54 Id., at para. 3, p. 511.
party who sought to invoke Order XLI rule 5 therein had contended
that furnishing of security was a mandatory requirement under the
said provision and since the stay was issued without imposing
condition of furnishing of security, the order issuing stay was contrary
to the mandate of the said provision. It was in these circumstances
that the learned Single Judge observed that the appropriate
proceedings for agitating these questions of law is by way of an
appeal.55
34. Further, the Court also took notice of the fact that the order
confirming the ex parte stay order sans security was confirmed by an
order passed in the presence of the counsel for the aggrieved party,
who had then not raised any issue as to lack of security.56 It noted in
its order that despite the fact that the party was duly represented and
had not raised any objections to the lack of security at the time of
confirmation of the order of stay, the party did not raise any
objection for a period of over four and a half years thereafter as
well.57 It was in these circumstances that the second application under
Order XLI rule 5 came to be dismissed. By no stretch of imagination
can the said judgement - given the above distinguishing factors and
given the nature of facts placed and contentions made before the
Court - be said to be one involving the same question of law in the
present matter. This Court finds no reason to regard the said
judgement as an authority on the issues before it.
55 Id., at para. 11 et. seq., pp. 516-517.
56 Id., at para. 9, pp. 515-516.
57 Id., at para. 9, p. 515.
35. Further, this Court bears in mind the very purpose of imposing such
conditions when granting a stay against an order of eviction: to
protect the interests of and to ensure compensation to the successful
landlord who is being deprived of the fruits of the order of eviction.
Even if the judgements in Crompton Greaves Ltd v State of Maharashtra,58
as well as Anderson Wright & Co v Amar Nath Roy & Ors.,59 cannot be
regarded as authorities because they have not set out the reasons for
the final order, it cannot be said that the judicial trend in such matters
has remained unchanged. The Bench of three judges of the Supreme
Court, in State of Maharashtra & Ors. v Supermax International Private
Limited & Ors.,60 repelling the contention that the principle
enunciated in Atma Ram Properties Pvt. Ltd. v Federal Motors Pvt. Ltd.,61
applies only in respect of proceedings under the Act and not under
diverse rent control legislations of other states observed:62
"66. The Rent Act was the socio-legal response to certain historical developments, namely,
the acute shortage of housing in the aftermath of the World War, the great influx of
refugees in a number of States of the Union following the partition of the country and the
massive migration inside the country from rural areas to the urban centres as a result of
rapid urbanisation. All these developments that took place almost at the same time
skewed the law of supply and demand totally in favour of the landlord. The need of the
hour, therefore, was to protect the tenant, who would have otherwise been left completely at
the mercy of the landlord. The legislature intervened and brought in the Rent Act, severely
restricting the grounds for enhancement of rent and for eviction of the tenant from the
rented premises, thus regulating the relationship between the landlord and the tenant
beyond the general law under the Transfer of Property Act, 1882. In this regard the
Court responded in equal, if not greater measures. But after about three quarters of a
century and three generations later when things are no longer the same and the urban
centres are faced with newer problems, some of those having their origin in the Rent Act
itself, there is the need to take a relook on the Court's attitude towards the relationship
between the landlord and the tenant and to provide for a more level ground in the judicial
arena."
58 Supra, n. 17.
59 Supra, n. 18.
60 Supra, n. 16.
61 Supra, n. 1.
62 Supra, n. 16, at p. 793
(Emphasis supplied)
36. Going further, AFTAB ALAM J., who was speaking for the Bench,
reiterated certain of the observations of G. S. SINGHVI J. in Satyawati
Sharma (Dead) by LRs v Union of India & Ors.,63 especially as to the
doctrine of temporal reasonableness and affirming the same,
observed:64
"71. We reaffirm the views expressed in Satyawati Sharma [(2008) 5 SCC 287] and
emphasise the need for a more balanced and objective approach to the relationship between
the landlord and tenant. This is not to say that the Court should lean in favour of the
landlord but merely that there is no longer any room for the assumption that all tenants,
as a class, are in dire circumstances and in desperate need of the Court's protection under
all circumstances. (The case of the present appellant who is in occupation of an area of
9000 sq ft in a building situate at Fort, Mumbai on a rental of Rs 5236.58, plus water
charges at the rate of Rs 515.35 per month more than amply highlights the point.)"
(Emphasis supplied)
37. An order directing tenant to make payment of reasonable user
charges commensurate with the market value of the leased premises is
but a reflection of this changing trend in judicial approach to disputes
that may more appropriately be termed rent control disputes than tenancy
disputes. The interest of the landlord who obtains a decree of eviction
but is refused the premises - doubtless to enable the tenant an
opportunity to exercise his right of appeal - cannot be regarded as
being protected merely because at the time of granting stay, a
condition of deposit was imposed. This Court is of the view that
when the initial condition of deposit was to be of reasonable user
charges commensurate with the market rate, it cannot, by any stretch
of imagination, be said that the interest of the landlord remains
63 (2008) 5 SCC 287, paras. 14, 29 and 32.
64 State of Maharashtra & Ors. v Supermax International Private Limited & Ors., supra, n. 16, at p. 794.
protected when the quantum of deposit remains unchanged for over
twenty years.
38. Given the above, this Court has no hesitation in coming to the
conclusion that an order under Order XLI rule 5 imposing a
condition of deposit/payment of reasonable user charges for the
continued user of the premises from the date of order of eviction is
not final and may be altered at a later stage in the proceedings. This
may be done by the Appellate Court on its own motion or on the
application of either of parties. The alteration may be either to
increase or decrease the amount earlier set and will depend upon the
facts and circumstances of the case. No straitjacket formula can be
laid down as to how often or to what extent the quantum ought to be
modified; the same shall be at the discretion of the Appellate Court to
be decided based on the specific circumstances attendant to each
case. However, no such application could be entertained unless the
party seeking modification is able to show changed circumstances as
would warrant the modification.
As to the doctrine of merger
39. This brings us to the second of Mr. Gupta's contentions; that in the
present matter, the appropriate Court which could have modified the
condition of deposit for stay is the Supreme Court. He contended
that the order of 12th April, 2001 by the Appellate Court that imposed
the condition merged with the order dated 10th December, 2004 of
the Supreme Court in Civil Appeal No. 7988 of 2004. Given that the
order of 12th April, 2001 merged with the said order of the Supreme
Court, it is contended that the condition of deposit imposed under
Order XLI rule 5 may be modified only by the Supreme Court.
40. He contended that once the Supreme Court considered the issue of
quantum of the deposit and, in the penultimate paragraph of the
judgement upheld the imposition of Rs. 15,000/- (Rupees fifteen
thousand only) per mensem as the condition of deposit, the same
cannot now be modified by the Appellate Court in view of the
doctrine of merger. The impugned orders observed that the doctrine
of merger cannot apply in the matter as the order of 10th December,
2004 of the Supreme Court did not consider the issue of quantum of
deposit. It relied on Kunhayammed & Ors. v State of Kerala & Anr.,65 to
hold that doctrine of merger does not apply where the judgement of
the appellate court is sub silentio on a particular issue. This Court finds
itself unable to agree with this contention of the tenant, as well as the
basis of the findings of the Appellate Court. It proceeds on an
incorrect understanding of the doctrine of merger and an incorrect
understanding of the nature of the order imposing condition of
deposit for stay of the order of eviction.
41. The doctrine of merger as expressed by a bench of three judges of the
Supreme Court as early as in 1958 in Commissioner of Income Tax,
Bombay v Amrit Bhogilal & Co.,66 and reiterated and affirmed by two
separate benches of three judges of the Supreme Court, in Gojer Bros.
65 (2000) 6 SCC 359.
66 (1959) SCR 713 : AIR 1958 SC 868.
(Pvt.) Ltd. v Ratan Lal Singh,67 and in Kunhayammed & Ors. v State of
Kerala & Anr.,68 was as under:
"10. There can be no doubt that, if an appeal is provided against an order passed by a
tribunal, the decision of the Appellate Authority is the operative decision in law. If the
Appellate Authority modifies or reverses the decision of the Tribunal, it is obvious that it
is the appellate decision that is effective and can be enforced. In law the position would be
just the same even if the appellate decision merely confirms the decision of the Tribunal.
As a result of the confirmation or affirmance of the decision of the Tribunal by the
Appellate Authority, the original decision merges in the appellate decision and it is the
appellate decision alone which subsists and is operative and capable of enforcement..."
(Emphasis supplied)
42. In Gojer Bros. (Pvt.) Ltd. v Ratan Lal Singh,69 the Court observed:
"11. The juristic justification of the doctrine of merger may be sought in the principle that
there cannot be, at one and the same time, more than one operative order governing the
same subject-matter. Therefore the judgment of an inferior court, if subjected to an
examination by the superior court, ceases to have existence in the eye of law and is treated
as being superseded by the judgment of the superior court. In other words, the judgment of
the inferior court loses its identity by its merger with the judgment of the superior court."
(Emphasis supplied)
43. After quoting from the decision of the Judicial Committee of the
Privy Council in Saiyid Jowad Hussain v Gendan Singh (since deceased) and
Ors.,70 to the effect that the decree to be executed is the decree of the
appellate court and not the original decree, the Court further
observed:71
"17. An application of this very principle yields the result that if the court of appeal
confirms, varies or reverses the decree of the lower court, the decree of the appellate court is
the only decree that can be amended [Brij Nwam v. Tijbal Bikram, (1910) 37 IA 70 :
ILR 32 All 295.] ; or that the limitation for executing a decree runs from the date of the
decree capable of execution and that is the decree of the appellate court which supersedes
that of the court of first instance [AIR 1926 PC 63 : 51 MLJ 781 : 53 IA 197] ; or
that if mesne profits are ordered from the date of suit until the expiry of three years after
67 (1974) 2 SCC 453.
68 Supra, n. 65.
69 Supra, n. 67, at p. 458.
70 (1925-26) 53 IA 197 : AIR 1926 PC 93.
71 Supra, n. 67, at p. 460.
the date of the decree, the decree to be considered is the decree capable of execution so that if
the decree of the trial Court is confirmed in appeal, three years will begin to run from the
date of the appellate decree [Bhup Indar v. Bijai, (1900) 27 IA 209 : ILR 23 All 152
: 5 CWN 52.]."
(Emphasis supplied)
44. After discussing the above authorities and before proceeding to
consider the merits of the issue of law being considered by it, the
Supreme Court, in Kunhayammed & Ors. v State of Kerala & Anr.,72
observed in a prolegomenary fashion:
"12. The logic underlying the doctrine of merger is that there cannot be more than one
decree or operative orders governing the same subject-matter at a given point of time. When
a decree or order passed by an inferior court, tribunal or authority was subjected to a
remedy available under the law before a superior forum then, though the decree or order
under challenge continues to be effective and binding, nevertheless its finality is put in
jeopardy. Once the superior court has disposed of the lis before it either way -- whether
the decree or order under appeal is set aside or modified or simply confirmed, it is the
decree or order of the superior court, tribunal or authority which is the final, binding and
operative decree or order wherein merges the decree or order passed by the court, tribunal or
the authority below."
(Emphasis supplied)
45. The Supreme Court, in that case, was considering the issue of
whether an application for review was maintainable qua a judgement
despite a petition for special leave to appeal under Article 136 of the
Constitution of India being heard and dismissed without grant of
leave. It concluded that where the leave to appeal is granted and the
appeal is decided with a reasoned order or otherwise, the original
order merges with the appellate order and cannot be reviewed, being
non existent by operation of the doctrine of merger.73 It also
observed inter alia that where the leave to appeal is not granted or, on
being granted, the appeal is dismissed without a reasoned order, the
72 Supra, n. 65, at p. 370.
73 Id., at para. 41, p. 383.
original order will continue to subsist and an application for review
would indeed be maintainable, although the final decision may not
differ from the opinion of the Supreme Court due to factors other
than the doctrine of merger.74
46. The above pronouncements all lead to the inevitable conclusion that
the operation of doctrine of merger is qua operative effect of the
subject order. The contention of the tenant before this Court is that
the doctrine of merger would operate to prevent the quantum being
revised by the Appellate Court at this stage inasmuch as the order of
the Appellate Court as to the quantum of deposit has merged with
the order of the Supreme Court. This cannot be accepted - at least
not without mutilating the concept of the doctrine. The doctrine of
merger, being an estoppel operating by record, is but an extension of
the doctrine of res judicata. It operates against multiplicity of operative
decrees/orders, not against the competence of a Court to issue an
order or to draw up a decree. When an original decree/order merges
by operation of the doctrine with the appellate decree/order, there
are 3 incidents thereof:
46.1. The necessary incidents of the original decree/order cease to
exist - they merge with and become the same as the incidents
the appellate decree/order.
46.2. The findings in the original decree/order cease to exist and are
not amenable to amendment or modification.
74 Id., at para. 40, pp. 382-383.
46.3. The judgement/reasoning in the original decree/order ceases
to exist and cannot be regarded as having any authority as a
precedent.
47. It was in similar circumstances that the authoritative pronouncements
of the past have applied the doctrine of merger - such as to ascertain
necessary incidents such as limitation75 and executability,76 or to
consider whether a judgement would have authority as a precedent,77
or to consider whether an order is final and unamendable.78 In the
instant case, the impugned orders have not sought to amend the
earlier order, nor has it become final qua any issue. As already held,
the order imposing the condition of deposit is not res judicata as to the
condition or the quantum; nor does it preclude the Court from
reconsidering the condition or the quantum. The observations of the
Supreme Court in Arjun Singh v Mohindra Kumar & Ors.,79 is
instructive in this regard:
"(13) ...Thus if an application for the adjournment of a suit is rejected, a subsequent
application for the same purpose even if based on the same fact, is not barred on the
application of any rule of res judicata, but would be rejected for the same grounds on which
the original application was refused. The principle underlying the distinction between the
rule of res judicata and a rejection on the ground that no new facts have been adduced to
justify a different order is vital. If the principle of res judicata is applicable to the decision
on a particular issue of fact, even if fresh facts were placed before the Court, the bar would
continue to operate and preclude a fresh investigation of the issues, whereas in the other
case, on proof of fresh facts, the court would be competent, nay would be bound to take
75 Batuk Nath v Musammat Munni Dei & Ors., (1913-14) 41 IA 104 : AIR 1914 PC 65; Hukumchund Boid,
since deceased (now represented by Juscurn Boid and Anr.) v Prithichand Lal Chowdhury, (1918-19) 46 IA 52 :
AIR 1918 PC 151; Saiyid Jowad Hussain v Gendan Singh (since deceased) and Ors., (1925-26) 53 IA 197 : AIR
1926 PC 93 S. S. Rathore v State of Madhya Pradesh, (1989) 4 SCC 582.
76 Batuk Nath v Musammat Munni Dei & Ors., (1913-14) 41 IA 104 : AIR 1914 PC 65; Gojer Bros. (Pvt.)
Ltd. v Ratan Lal Singh, supra, n. 67.
77 State of Madras v Madurai Mills Co. Ltd., (1967) 1 SCR 732 : AIR 1967 SC 681.
78 Commissioner of Income Tax, Bombay v Amrit Bhogilal & Co., supra, n. 66; Kunhayammed & Ors. v State of
Kerala & Anr., supra, n. 65.
79 Supra, n. 31, at para. 13, p. 1001 : at p. 961.
those into account and make an order conformably to the new facts freshly brought before
the court."
(Emphasis supplied)
48. This Court is of the view that these principles would apply on all
fours to an order under Order XLI rule 5 of the Code imposing a
condition of deposit for grant of stay of the order of eviction. As
earlier held, nothing will bar either party from reapplying to the Court
seized of the appeal seeking that the grant of stay, condition to be
imposed therefor, and/or the quantum of deposit be reconsidered -
even if the same were approved, modified or set aside in appeal or
revision prior to such second and/or further application. However, a
note of caution must be struck in this regard: the second and/or
further application shall not be maintainable unless further facts are
shown warranting the Court's undertaking the exercise again. It must
also be noted that moving such an application sans such further facts
may also amount to an abuse of the process of the Court.
49. However, where such new and fresh facts are indeed shown -
doubtless facts that did not exist or could not be ascertained despite
exercise of due diligence at the time when the original order was
made - the Court seized of the appeal would be bound to consider
the new facts and pass a fresh order as to either the grant of stay, the
condition to be imposed therefor, and/or the quantum of deposit, as
may be prayed for. A further note of caution must be struck in this
regard, for the Court considering the second and/or further
application must ensure that it pays due attention to any law laid
down by the appellate or revisional Court at the earlier instance. The
Court ought to not give a go by to the provisions of Article 141 of
the Constitution of India, the doctrine of precedent and the doctrine
of stare decisis merely because the doctrine of res judicata and the
doctrine of merger do not apply to an order under Order XLI rule 5.
Indeed, this was the very note of caution struck by the Supreme
Court in Kunhayammed & Ors. v State of Kerala & Anr.80
50. In view of the above, this Court is of the view that while the
reasoning given by the Appellate Court in respect of the issue of
doctrine of merger was inaccurate, the conclusions do not warrant
interference. The order of 12th April, 2001 of the Appellate Court
indeed merged with the order dated 10th December, 2004 of the
Supreme Court. However, the same does not preclude the Appellate
Court from considering the application newly filed by the landlord
and its having so done, this Court finds no reason to interfere with
the same.
As to the procedure adopted by the Appellate Court and the
quantum
51. At this juncture, ordinarily this Court would have dismissed the
petition, inasmuch as it has been held that the Appellate Court indeed
had jurisdiction to pass the impugned orders. However, Mr. Gupta
has raised various further grounds challenging the impugned orders.
He contends that each of these grounds in themselves, as well as all
of them taken together, amount to material irregularity and/or patent
illegality. He contends that these irregularities are of such a nature as
80 Supra, n. 65, at para. 40, p. 383.
to warrant interference with under article 227 of the Constitution of
India.
52. He contended that the application under Order XLI rule 5 of the
Code was filed at a juncture when the appeal was fixed for final
hearing. He further argued that the application was clearly filed with
the intent to delay the proceedings. He submitted, thus, that the
application ought to not have been heard at all. This Court is of the
opinion that this ground, by itself, cannot be a ground for
interference with the impugned orders. The landlord has a right to file
the application under Order XLI rule 5 of the Code, which has been
exercised in the instant matter. The Appellate Court was duty bound
to consider the application and pass an order thereon, which has been
done by it in the form of the impugned orders. De hors particulars of
fraud, mala fide, or any attempt at abuse of process of the Court,
neither the filing of the application, nor the passing of the impugned
orders can be considered materially irregular or patently illegal.
53. He thereafter contended that the manner in which the application has
been considered and the impugned orders were passed is patently
illegal. As earlier observed, the first impugned order, after holding the
application under Order XLI rule 5 of the Code maintainable,
directed the parties to file documents supported by appropriate
affidavits to assist the Court in calculating the quantum of deposit.
He submits that the application, to be considered maintainable, ought
to have been filed with sufficient material and be supported by an
affidavit, before being considered. He submits that in the absence of
such an affidavit and documents, there was no basis for the Appellate
Court to have exercised its jurisdiction in holding the application
maintainable or directing the parties to file affidavits and/or
documents. He submits that sans the affidavit and documents, the
Appellate Court would have had no jurisdiction to have passed the
first impugned order.
54. He submits further that even thereafter, prior to passing the second
impugned order, no trial was conducted, nor was any evidence
permitted to be led by the parties in respect of the value that could
have been fetched by the premises. He submits that the documents
relied on by the landlord in support of its case - being leases with
business houses qua premises located in the same building - were
unilateral documents that were prepared after the disputes
commenced. He contended that the documents provide no
particulars of the facilities provided to the tenants therein and hence
the value of the lease ought to not have been regarded as indicative of
the reasonable rent the premises may have fetched. He contended
that in any case the tenant ought to have been given an opportunity
to cross examine the parties to the agreements. Lastly he submits that
in any case, the revised user charges ought to have been made payable
from the date when the documents and affidavits were brought on
record, since this was the day when material was actually available on
record to justify exercise of discretion in revising the user charges.
These submissions deserve to be rejected as being without merit for
the reasons discussed hereinbelow.
55. It cannot be stated that the Appellate Court was without jurisdiction
when it passed the first impugned order. The jurisdiction of the Court
to impose conditions when granting a stay under Order XLI rule 5 of
the Code is equitable in nature.81 The power is a necessary incident to
the equitable power that the Court exercises in staying the order
appealed from. It can be exercised even suo motu, provided there is
sufficient material available on record to justify the exercise of the
power. It is as a matter of judicial propriety and judicial discipline that
the Court does not exercise the power on its own motion - especially
considering the fact that more often than not, material may not be
available on record to warrant such an exercise until a party actually
moves the Court to so exercise its powers. However, this cannot be
read to understand that the lack of material on record divests the
Court of its power to impose conditions when granting a stay under
Order XLI rule 5 of the Code.
56. The Appellate Court, being empowered to consider the application
under Order XLI rule 5 of the Code, had passed the first impugned
order holding that it was indeed competent to revise the user charges
if sufficient cause is shown therefor. It was in view of the fact that
documents were filed by the landlord in support of the application
under Order XLI rule 5 of the Code without any affidavit supporting
the same that the Appellate Court passed the first impugned order
directing that an affidavit may be filed to support the application and
documents. An order passed in exercise of a power vested in the
authority, directing the parties to furnish documents to enable the
81 Supra, n. 1, at p. 713.
authority to appropriately exercise the power can hardly be regarded
as illegal or contrary to material on record. To the contrary, the
Appellate Court adopted the correct course in directing the parties to
file documents supported by affidavits to assist it in the inquiry as to
the quantum of deposit. In doing so, the Appellate Court was
following the mandate of the Supreme Court in State of Maharashtra &
Ors. v Supermax International Private Limited & Ors.,82 where the
judgement cautioned the Court affixing the quantum to exercise
restraint and not fix any excessive, fanciful or punitive amount.83
57. Furthermore, it cannot be accepted that the second impugned order
was patently illegal for the reasons canvassed before this Court. The
order to be passed on an application under Order XLI rule 5 of the
Code granting stay subject to conditions has to be seen as one
package; the appellant cannot be heard to contend that it accepts the
order insofar as it stays the execution but objects to the conditions.84
It could hardly be said that the Appellate Court ought to decide the
question as to whether the stay ought to be granted summarily, based
on affidavits and photocopies of documents, but ought to conduct a
detailed trial for the purpose of ascertaining the quantum of deposit.
It was not - nor could it have been - the contention of the tenant
that the procedure adopted by the Appellate Court was
unprecedented or not founded in law. Merely because the Appellate
Court has proceeded to ascertain the quantum based on the affidavits
and documents filed by the parties, the same cannot be considered as
82 Supra, n. 16.
83 Supra, n. 16, at para. 77, p. 796.
84 Supra, n. 16, at para. 72, p. 795.
an error so gross and patent as to warrant interference under Article
227; this Court is of the view that this is not an error, but the
appropriate course to have been followed.
58. It must also be borne in mind that the Appellate Court had given an
opportunity to both parties, landlord and tenant alike, to file
documents supported by affidavits, to enable the Court to ascertain
the quantum to be fixed in the instant matter. The second impugned
order specifically notes that while the landlord has furnished the rates
of rent, details and particulars of tenancies in the vicinity, including of
premises in the same building, the tenant has not even supplied basic
particulars such as area of tenancy sought to be relied upon by it. It
notes that the tenant has failed to produce any documents in support
of its case and has further failed to rebut the case of the landlord as
well. It observes that the tenant cannot be heard to contend that the
documents indicating rent fetched by premises in the same building
ought to not be considered inasmuch as it does not provide
particulars of facilities provided to the tenancies. It observes that the
Court can presume - albeit a rebuttable presumption - in the absence
of proof to the contrary from the tenant, that the tenant is being
provided the same facilities as are other tenants in the same premises.
It further observes that the tenant, being based out of the same
building, ought to have provided particulars as to the facilities made
available to the other tenants if it seeks to distinguish its tenancy from
the others, instead of raising a technical ground for rejection such as
the failure of the landlord to have furnished particulars.
59. As to the objection that the various agreements and leases placed on
record have grossly inflated values, the Appellate Court observed that
the agreements are with business houses that are going concerns
running their respective businesses from the premises. It observed
that it is inconceivable that a business concern would execute a duly
registered agreement with inflated rent rates merely at the instance of
the landlord. It is in these circumstances that the Appellate Court
proceeded to make the second impugned order. Where both parties
have been given an equal and sufficient opportunity to make their
case as to the quantum to be fixed, and where the Court considers all
the material available on record and comes to a conclusion on the
basis thereof, the same cannot be regarded as being patently illegal
and warranting interference.
60. Mr. Gupta lastly contends that the fixation of the quantum of deposit
at Rs. 1,60,000/- (Rupees one lakh sixty thousand only) per mensem
towards user charges for the leased premises is wholly onerous. He
contends that the sudden increase of the quantum from Rs. 25,000/-
(Rupees twenty five thousand only) to Rs. 1,60,000/- (Rupees one
lakh sixty thousand only) is wholly unwarranted, especially when the
contractual rental rate is Rs. 371.90/- (Rupees three hundred seventy
one and ninety paise only). He contends that the Supreme Court has,
in its order of 10th December, 2004, even after noting that adjoining
premises were let out for Rs. 3,50,000/- (Rupees three lakh fifty
thousand only), observed that the amount of Rs. 15,000/- (Rupees
fifteen thousand only) per mensem is reasonable user charges for the
premises. He contends that in view thereof, the Appellate Court was
not right in increasing user charges to the exorbitant amount of Rs.
1,60,000/- (Rupees one lakh sixty thousand only) per mensem.
61. He further contends that even assuming that the premises could
indeed have fetched over Rs. 3,20,000/- (Rupees three lakh twenty
thousand only) per mensem, the Appellate Court ought to not have
granted user charges at fifty percent of the same without applying
judicial mind to the facts and circumstances attendant to the case of
the parties before it. He contends that the tenant would be gravely
prejudiced as a result of the impugned order affixing the quantum of
deposit at Rs. 1,60,000/- (Rupees one lakh sixty thousand only),
inasmuch as the tenant is likely to be unable to make the deposit and
might lose the premises as a result thereof. He submitted that the
Appellate Court has not given any reasons for fixing the quantum at
the figure it has and has proceeded almost entirely on surmises and
conjectures and the second impugned order ought to be set aside.
62. This contention is one that ought to not be canvassed in a petition
under Article 227, especially in respect of an interim order. The
contentions, even if accepted, do not disclose an error of jurisdiction
to be remedied in exercise of this Court's supervisory power; they are,
at best, errors of facts. The supervisory jurisdiction of this Court will
not be exercised to correct mere errors of fact or of law unless the
error is manifest and apparent on the face of the proceedings such as
when it is based on clear ignorance or utter disregard of the
provisions of law, and a grave injustice or gross failure of justice has
occasioned thereby.85
63. The Appellate Court has considered the material made available by
the parties and the fact that similar premises are fetching rent at rates
ranging from Rs. 270/- (Rupees two hundred seventy only) to Rs.
420/- (Rupees four hundred twenty only) per square foot per mensem
and keeping in mind the possibility of variation on account of
facilities made available, came to the conclusion that the leased
premises would be capable of earning at least Rs. 270/- (Rupees two
hundred seventy only) per square foot per mensem. It observed that as
no material was placed on record in support of the contention that
the two garages forming a part of the leased premises could fetch Rs.
1,00,000/- (Rupees one lakh only) per mensem, they may be assumed to
fetch Rs. 25,000/- (Rupees twenty five thousand only) per mensem
considering their location and accessibility.
64. On this basis, and given that the landlord prayed only for fifty percent
of the actual value that the premises would be capable of fetching, the
Appellate Court had revised the quantum of deposit to Rs. 1,60,000/-
(Rupees one lakh sixty thousand only) per mensem. It is thus evident
that the Appellate Court has given due consideration to all material
available on record and the facts and attendant circumstances relevant
to the issue to arrive at its conclusion as found in the second
impugned order. The tenant is, in effect, praying that this Court
85 Surya Devi Rai v Ram Chander Rai & Ors., supra, n. 3, at para. 38(5), p. 695.
reconsider the material to arrive at its own conclusion; this Court sees
no justification to so apply itself.
65. This Court, in exercise of its supervisory jurisdiction, will not convert
itself into a court of appeal and indulge in reappreciation or
evaluation of evidence or correct errors in drawing inferences or
correct errors of mere formal or technical character.86 The view taken
by the Appellate Court in affixing the quantum of deposit at the said
figure is a reasonably possible view; it cannot be regarded as a patent
error warranting interference with.87
66. In the above circumstances, the petition is dismissed as being without
merit. The parties shall bear their own costs.
NAJMI WAZIRI
(JUDGE)
MAY 07, 2014
86 Surya Devi Rai v Ram Chander Rai & Ors., supra, n. 3, at para. 38(8), p. 696.
87 Surya Devi Rai v Ram Chander Rai & Ors., supra, n. 3, at para. 38(6), p. 695.
