Fab India Overseas Private Ltd. vs S.N. Sheopuri
2015 Latest Caselaw 7963 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       RFA (OS) No. 118/2011
        FAB INDIA OVERSEAS PRIVATE LTD.                         ..... Appellant
                           Through:     Mr. Virender Mehta, R.K. Mehta &
                                        Mr. Kunal Mehta, Advs.
                           versus
        S.N. SHEOPURI                                    ..... Respondent
                           Through:     Mr. Rajeev Sharma & Ms. Radha
                                        Lakshmi, Advs.

        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MR. JUSTICE S.P.GARG
                       ORDER

        %              16.10.2015
        CM No. 16750/2015

This is an application seeking clarification of judgment dated 31.01.2013. For the sake of clarity, we have referred to the applicant- S.N. Sheopuri (now represented by Mushran) as the plaintiff and the non-applicant Fab India Overseas Pvt. Ltd. as the defendant.

2. Annexure A to the application is an order dated 22.05.2015 passed by a single Judge of this Court in I.A. No. 8082/2014 in CS (OS) No. 246/2009 titled S.N. Sheopuri v. Fab India Overseas Private Limited. A perusal of the said order would indicate, that it quotes from the judgment dated 04.07.2011 passed in CS(OS) No.246/2009 allowing the prayer for preliminary decree of partition. The judgment also partly allowed the plaintiff's prayer for mesne profits after rejecting the defendant's plea that there were multiple tenancies and the notice of termination of tenancy was invalid. In

other words, the said contention of the defendant that he continued and remained a tenant was rejected.

3. The defendant thereafter filed RFA (OS) No. 118/2011 and the plaintiff Mushran filed cross-objection CM No. 6572/2012, which were disposed of by us vide decision dated 31.01.2013. In the penultimate paragraph of the aforesaid decision/ judgment, we have held:

"49. In view of the aforesaid discussion, we partly allow the appeal and the cross-objections and it is held as under:-

A. The plea of FIOP Ltd. that there were multiple tenancies and doctrine of merger supports them is rejected. B. Preliminary decree of partition has been rightly passed and is valid. It is accordingly upheld.

C. Mushran is entitled to mesne profit equal to 50% of his share in the property and has been computed as under:

            S.No.                Period                   Mesne Profit
                                                           per month
            01.     01.07.1995 - 31.08.1995           Rs.50,000/-
            02.     01.09.1995 - 31.12.1997           Rs.2,47,500
            03.     01.01.1998 - 31.12.2007           Rs.2,75,000
            03.     01.01.2008 onwards                Rs.3,02,500

D. Mushran will be entitled to interest @ 6% on the amount of mesne profit for the period it remains unpaid till the payment is made. (Refer paragraph 44 above).

E. Mushran will pay (deficient) court fee on the future mesne profit i.e. mesne profit w.e.f. 1st September, 1995 onwards as per the calculations made above, within a period of eight weeks from today. Modified decree sheet will be drawn accordingly.

F. Mushran is entitled to cost in the appeal and the cross objection".

4. A reading of the said paragraph would unmistakably reflect that we have specifically rejected the plea of the defendant that there were multiple tenancies or doctrine of merger supports their submission. We have upheld the preliminary decree of partition observing that it was rightly passed. In addition to above, we have held that plaintiff (Mushran) would be entitled to mense profit equal to 50% of his share in the property, which was computed/calculated for the period from 01.07.1995 till 31.12.2007 and from 01.01.2008 onwards. The plaintiff (Mushran) would be entitled to interest @ 6% on the amount of mense profit for the period it remains unpaid.

5. Order dated 22.05.2015 passed by learned Single Judge makes reference and quotes paragraphs 36 and 37 of our judgment dated 31.01.2015 and thereafter records the plea raised by the defendant that the aforesaid paragraphs clearly talk of continuity of tenancy in favour of the defendant. In other words, the defendant has raised the plea before the single Judge that the tenancy rights granted to them continue and tenancy as per findings in the judgment dated 31.1.2015 was never terminated. It is in this light that the counsel for the plaintiff had submitted before the single judge that he would move an appropriate application before the Division Bench seeking clarification with reference to paragraphs 36 and 37 as well as 49 of the judgment dated 31.01.2013. Accordingly, the present application for direction/clarification has been filed by the plaintiff (Mushran).

6. Learned counsel appearing for the defendant in the reply and during

the course of hearing before us on 18.09.2015 had relied upon decision of the Supreme Court in Sree Narayana Dharmasanghom Trust v. Swami Prakasananda and Others, (1997) 6 SCC 78, Abhai Maligai Partnership Firm and Another versus K. Santhakumaran and Others, AIR 1999 SC 1486 and State of Maharashtra and Another versus Prabhakar Bhikaji Ingle, (1996) 3 SCC 463. The aforesaid decisions were referred in support of the proposition that doctrine of merger of judgments/decision would apply and the judgment dated 31.01.2013 had merged with the decision of the Supreme Court as both the plaintiff (Mushran) and the defendant had preferred special leave to appeal before the Supreme Court, which were dismissed of vide order dated 05.11.2014. The aforesaid contention of the defendant is unmerited and has to be rejected in view of the larger bench decision of the Supreme Court in Kunhayammed and Others versus State of Kerala and Another, (2000) 6 SCC 359, wherein the effect of dismissal of a SLP by a non-speaking order has been examined. The said judgment specifically overrules Sree Narayana Dharmasanghom Trust v. Swami Prakasananda and Others, (1997) 6 SCC 78 and State of Maharashtra and Another versus Prabhakar Bhikaji Ingle, (1996) 3 SCC 463.

7. Learned counsel for the defendant submits that the plaintiff (Mushran) had earlier filed R.P. No. 344/2013 which was dismissed as withdrawn and therefore, the present application would not be maintainable. This plea is again fallacious. The plaintiff (Mushran) had filed R.P. No. 344/2013 and order dated 19.07.2013 was passed:

"After some hearing learned counsel for the applicant accepts that the second, third and fourth grounds

cannot be made subject matter of review. With regard to the first ground, learned counsel for the applicant seeks permission to withdraw the present application for review. He states that, if required and necessary, he will file a fresh application.

The statement made by the counsel for the applicant is taken on record and accordingly the application is dismissed as withdrawn."

The said order records that the applicant therein had sought permission to withdraw the application for review and had stated that if required and necessary, he would file a fresh application. The statement made was taken on record and thereafter, the application was dismissed as withdrawn. This order does not foreclose the right of the applicant i.e. plaintiff (Mushran) to move an application, if required and necessary.

8. Learned counsel for the defendant submits that this plea was not raised by the plaintiff (Mushran) in the Special Leave to Appeal. Learned counsel for the plaintiff (Mushran), on the other hand, submits that they had filed the Review Petition No.344/2013 before this Court before the SLP was filed. Subsequently, the plaintiff (Mushran) had filed an affidavit before the Supreme Court in the petition for special leave, affirming that they would raise this ground before the Division Bench of the Delhi High Court, if required and necessary.

9. Mr. Mehta, counsel for the defendant submits that this application for clarification under Section 151 of the Code of Civil Procedure, 1908 is not maintainable as an application for review should have been filed. We do not find any merit in the said contention. We have already quoted paragraph 49 of the judgment dated 31.01.2013. The said paragraph is operative finding and direction for the purpose of drawing the degree. We

are not modifying or amending our judgment. No such prayer is made. The need for clarification only arose after the single Judge, i.e. trial Court, expressed some difficulty and wanted clarification and clarity. We would perceive that no elucidation is required, for no ambiguity exists. Our judgment dated 31.01.2013 holds that the tenancy was validly terminated and rejected the plea that there were multiple tenancies and, therefore, different notices were required to be issued. This is the reason why mesne profit have been awarded. Mesne profits are not awarded where the tenancy continues. Mesne profits are the actual market rent and in the nature of damages. They are computed after making reference to lease deeds and rent being paid for similar properties between third parties. Contractual rent is binding between the parties for the term of the lease and not after lease is terminated or when the term of the lease comes to an end by flux of time.

10. On the last date of hearing, we had asked counsel for the defendant to state and answer whether mesne profit can be awarded if tenancy subsists. Learned counsel for the defendant had refused to answer this question. He now seeks to clarify that the tenancy continues in view of the findings in paragraphs 36 and 37 of judgment dated 31.01.2013. We must say that the plea raised by the defendant is fanciful and suffers from caprice. Paragraphs 36 and 37 under the heading "(B) Plea of merger and Mesne Profits or rendition of accounts", are being read out of context. These have to be read with paragraphs 35 and 39, which use the expression "use and occupation charges". Reference can be made to paragraph 33 also. For the sake of completeness, we reproduce paragraphs 32 to 39 of our judgment dated 31.3.2013:-

―32. Doctrine of merger, i.e. smaller merger into the larger or bigger, envisaged in Section 111 Clause (d) of the Transfer of Property Act, does not help or assist the FIOP Limited. In fact, the said doctrine supports the case and the stand of Mushran. Section 111(d) of the Transfer of Property Act reads as under:-

―111. Determination of lease.- A lease of immoveable property determines--

...................

(d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right‖

It is clear from the said Section that any existing lease whether month by month or a written lease does not get extinguished because the lessee purchases a part of the revisionary interest from the co-landlord/owner as there is no fusion of whole interest as mandated for determination of lease in terms of Section 111(d). The lease continues and remains in subsistence. In India Umbrella Manufacturing Co & Ors. versus Bhagabandei Agarwalla & Ors., AIR 2004 SC 1321, the suit house was jointly owned by two co- owners and leased out to two tenants. The co-owner jointly filed suit for eviction but midway, one of the co-owners transfered her interest to the partner of one of the tenant firm. The transferee expressed his intention to withdraw the suit but this plea was not accepted because entire interest of the landlord did not merge with the tenants. The transferee had purchased only a share in the property and not entire property and, therefore, doctrine of merger as per of clause (d) of Section 111 of the Transfer of Property Act was not attracted, the tenancy continued. It is, therefore, clear that by merely purchasing 50% share of the co-owner, the tenancy rights or the tenancy itself in favour of FIOP Ltd. did not get extinguished, it continued.

33. We are aware and conscious of the fact that the case of Mushran is that they had determined month to month tenancy by issue of notice dated 10th May, 1995 but this to

our mind would not make any difference as far as the plea based on clause (d) to Section 111 of the Transfer of Property Act is concerned. The said principle would continue to apply.

34. We would only rely upon three judgments of the Supreme Court. In Badri Narain Jha and Ors. v. Rameshwar Dayal Singh and Ors., AIR 1951 SC 186, it was observed that if the lessor purchases the lessee's interest, the lease gets extinguished as a person cannot be both, the landlord and the tenant, but there is no extinction of lease, if one of the lessees purchases a part of the lessor's interest. In such cases, the leasehold and the revisionary interest do not coincide. In Pramod Kumar Jaiswal and Ors v. Bibi Husn Bano and Ors, AIR 2005 SC 2857, three Hon'ble Judges of the Supreme Court considered the reference made pursuant to difference of opinion noticed between ratio in Nalakath Sainuddin v. Koorikadan Sulaiman (2002) 6 SCC 1 and Indra Perfumery v. Moti Lal and Ors. AIR 2002 SC 2562. In the said decisions, there was difference of opinion between views expressed by P.K. Balasubramanayan, J., and the Chief Justice of India R.C. Lahoti, J concurred by G.P. Mathur, J., on an aspect which is not relevant in the present decision. However, the three Hon'ble Judges agreed on the ratio that the doctrine of merger as envisaged and stipulated in clause (d) of Section 111 of the Transfer of Property Act, requires merger of the whole of the leasehold right/interest of the lessee and the lessor in the property in one person and not when there is part coalescing of the leasehold right with one of the many tenants purchasing the ownership right in the property. The said doctrine is not applicable in case of assignment of fraction or revision/rights of a co-owner/landlord. The judgment of P.K. Balasubramanayan J, refers to the doctrine of merger as expounded and explained by Blackstone, Cheshire and Burn's Modern Law of Real Property (16th Edition), Megarry's Manual of the Law of Real Property (8th Edition) and Section 111(d) of the Transfer of Property

Act. The decision also refers to the earlier judgments on the said issue and question. It was accordingly opined:

"36. ....... A plain and grammatical interpretation of Section 111(d) of the Transfer of Property Act leaves no room for doubt that unless the interests of the lessee and that of the lessor in the whole of the property leased, become vested at the same time in one person in the same right, a determination of the lease cannot take place. On taking an assignment from some of the co-owner landlords, the interests of the lessee and the lessor in the whole of the property do not become vested at the same time in one person in the same right. Therefore, a lessee who has taken assignment of the rights of a co-owner lessor, cannot successfully raise the plea of determination of tenancy on the ground of merger of his lessee's estate in that of the estate of the landlord."

35. The admitted facts have been noticed above. FIOP Limited was originally the tenant of the entire property under joint ownership of Sheopori and Mushran, both of them being 50% owners though their portions were not separated. By sale deed dated 21st October, 2005, FIOP Limited purchased 50% share in the property from Sheopori. To this extent the FIOP Limited became 50% owner of the property. However, this will not affect and make FIOP Limited also owner of the balance 50% in the property owned by Mushran. They remained tenant of Mushran to the extent of 50% of the property and,hence, are liable to pay use and occupation charges to Mushran for the said 50%. The contention of FIOP Limited to the contrary is inequitable, unjust and unfair.

36. In view of the aforesaid discussion, it has to be held that even after FIOP Ltd. purchased 50% share of Sheopori, the tenancy was not determined, and continued. FIOP Ltd. would continue to be liable to pay rent i.e. share of Mushran. Their liability and obligation to pay the said rent does not get evaporated, and continues. Mushran has legal right to claim mesne profit or rent from FIOP Ltd.

37. We do not think Mushran is entitled to decree of

rendition of accounts or a share in the profits, if any, earned by the FIOP Ltd. after 21st October, 2005. Mushan does not get any share in the profits or losses of FIOP Ltd. The reason is obvious that the tenancy rights or the right of occupation did not undergo a change with FIOP Limited acquiring 50% ownership rights in the tenanted property. They continued and remained a tenant of Mushran.

38. Thus the plea of merger, raised by FIOP Limited, has to be rejected. Accordingly, the cross-objections filed by Mushran, to this extent, are allowed and it is held that FIOP Limited is liable to pay use and occupation charges to the extent of 50% share owned and belonging to Mushran. Rate of Mesne Profits and interest.

―39. Mesne profit is nothing but the damages which the erstwhile tenant after determination of the lease has to pay. The landlord is compensated for the loss caused because he is denied and deprived of the possession of the property. A person in wrongful possession has to pay compensation on the basis of profit he actually received or with ordinary diligence might have received. (see Fateh Chand vs. Bal Kishan AIR 1963 SC 1405). The market rate of rent is a good measure and standard to compute the same. What would be market rate of rent requires undertaking comparative assessment of the nature, location, age and condition etc. of a property and similar premises in the surrounding areas which have been given on rent during the period in question. There is some element of guess work and no uniform or standard pattern of assessment can be applied.‖

11. As already recorded above, we have upheld finding of the single Judge that the tenancy was validly terminated. This is a reason why mesne profit i.e. market rent has been awarded as compensation/damages. Mesne profit was restricted to 50% of the property as the plaintiff (Mushran) had/has 50% undivided interest in the property. Balance undivided interest of the property during the pendency of the CS (OS) No. 246/2009 was

purchased by the defendant from the co-owner.

12. We, therefore, dispose of the present application observing that the paragraph 49 of the judgment is clear and elucidated. It holds that the decree of the partition was rightly passed and is valid. Decree of mesne profit it has been held was valid and rightly passed as the tenancy stands terminated. The decree of the mesne profit equal to 50% share in the property was passed as the defendant has purchased 50% undivided share of the property from the other co-owner.

The application is disposed of.

SANJIV KHANNA, J.

S.P.GARG, J.

OCTOBER 16, 2015 Afa/NA