Muthoot Finance Limited vs Kailash Rani & Ors
2016 Latest Caselaw 3243 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Date of decision: 4th May, 2016.

+                RFA No.84/2015 & CM No.28479/2015 (for direction)

       MUTHOOT FINANCE LIMITED                 ..... Appellant
                   Through: Mr. Ajay Kohli and Mr. S.S. Sobti,
                            Advs.
                                    Versus
    KAILASH RANI & ORS                        ..... Respondents

Through: Mr. Puneet Agrawal, Adv.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. This first appeal under Section 96 of the Code of Civil Procedure,

1908 (CPC) impugns the judgment and decree dated 31st October, 2014 of

the Court of the Additional District Judge (ADJ)-02, North, Rohini Courts,

Delhi decreeing CS No.325/2014 filed by the four respondents/plaintiffs

namely Smt. Kailash Rani, Smt. Rita Sharma, Smt. Rosy Sharma and Smt.

Rekha Sharma for ejectment of the appellant/defendant from Unit No.201,

Second Floor, Aggarwal Plaza, Plot No.4, B/N Block, Local Shopping

Center, Shalimar Bagh, New Delhi and for recovery of mesne profits /

damages for use and occupation @ Rs.1,50,000/- per month with effect from

the date of determination of tenancy i.e. 1 st March, 2012 till the date of

vacation of the premises along with pendente lite interest @ 15% per annum.

2. The appeal came up first before the Court on 10th February, 2015

when, while issuing notice thereof, subject to the deposit by the appellant of

a sum of Rs.11 lakhs in this Court, the operation of the judgment and decree

was stayed. The said amount is reported to have been deposited. Attempts at

amicable settlement failed. On 25th August, 2015, the counsel for the

appellant undertook to pay future monthly use and occupation charges @

Rs.1 lakh per month. The counsels were heard on 29th April, 2016 and on

completion of hearing, finding elements of amicable settlement to be still

existing, the matter was adjourned to today.

3. No compromise has been possible between the parties.

4. The counsel for the appellant has fairly stated that as far as the decree

for ejectment is concerned, he is confining the relief only to grant of time to

vacate the premises. He further states that for the said additional time the

appellant is willing to pay to the respondents the market rent which the

respondents are claiming i.e. Rs.1,55,250/- per month.

5. Accordingly, the appeal insofar as the challenge therein to the decree

for ejectment is concerned is dismissed. However subject to the appellant

paying to the respondents from the month of May, 2016 till the month of

vacation of the premises, use and occupation charges at the rate of

Rs.1,55,250/- per month in advance for each month by the 10th day of the

month, time is given to the appellant till 31st October, 2016 to vacate the

premises and the decree for ejectment is made inexecutable till then. If there

is any default in payment, the respondents shall be entitled to execute the

decree for ejectment also forthwith.

6. With the appellant giving up the challenge to the decree for ejectment,

the only ground on which the decree, insofar as for mesne profits is

concerned, can be challenged is qua the rate at which the mesne profits have

been awarded. It is the contention of the counsel for the appellant that the

learned ADJ has awarded mesne profits at the rate claimed by the

respondents/plaintiffs without the respondents/plaintiffs leading any

evidence whatsoever with respect thereto. Reliance in this regard is placed

on (i) A.R. Chadha and Co. Vs. Punjab and Sind Bank

MANU/DE/2362/2008 where, finding that the plaintiffs therein had not led

any evidence as to the prevalent letting value of the premises and observing

that the Division Bench of this Court in National Radio & Electronics Co.

Ltd. Vs. Motion Pictures Association 122 (2005) DLT 629 has held that no

judicial notice of the rate of mesne profits can be taken, mesne profits were

confined to the rate of the last paid rent; (ii) State Bank of India Vs. H.C.

Takyar (HUF) MANU/DE/0761/2012 holding that increase of 15% per

annum for commercial premises should normally be taken where there is no

documentary evidence to prove rate of rent for the period of unauthorised

occupation; (iii) M.C. Agrawal HUF Vs. M/s. Sahara India 183 (2011)

DLT 105 also awarding mesne profits at a rate enhanced by 15% over the

last paid rent in the absence of any evidence. It is stated that so computed,

mesne profits should be confined to Rs.53,232/- per month for the period

from 1st March, 2012 to 28th February, 2013; Rs.61,217/- per month for the

period from 1st March, 2013 to 28th February, 2014; Rs.70,400/- per month

for the period from 1st March, 2014 to 28th February, 2015; Rs.80,960/- per

month for the period from 1st March, 2015 to 28th February, 2016.

7. I have examined the Trial Court record to verify whether there is any

material to support the decree for mesne profits @ Rs.1,50,000/- per month.

8. The respondents/plaintiffs in the notice of determination of tenancy

preceding the institution of the suit from which this appeal arises itself

intimated the appellant/defendant that on failure of the appellant/defendant

to, on determination of its tenancy, vacating the premises, it shall be liable to

pay mesne profits / damages for use and occupation at the prevalent letting

value which was in excess of Rs.1,50,000/- per month. The

appellant/defendant in response thereto, though denied the same but was

insisting upon its right to continue as a tenant in the premises and which

right has now been given up.

9. The respondents/plaintiffs in the plaint again pleaded that the

prevalent letting value of the premises was @ Rs.1,50,000/- per month,

though did not give particulars of any other similar premises which may

have been let out at the said rate and along with the plaint did not also file

documents of letting of any other similar premises showing the prevalent

rate of rent. The appellant/defendant in its written statement though denied

the prevalent letting value to be @ Rs.1,50,000/- per month, also did not

give instance of contemporaneous letting of any other similar premises. As

aforesaid, the emphasis then was on the appellant being not liable to be

ejected. Though the respondents/plaintiffs filed a replication but nothing

substantial on this aspect was pleaded therein as well.

10. The respondents/plaintiffs examined three witnesses, neither of whom

also deposed of the rate at which any other premises in the building may

have been contemporaneously let out and the only evidence led was of the

appellant/defendant during negotiations having agreed to pay rent of

Rs.1,15,000/- per month but which was not acceptable to the

respondents/plaintiffs and which evidence was also challenged by the

appellant/defendant. The appellant/defendant also in its evidence did not

prove the rate at which any other similar premises may have been

contemporaneously let out, though denied having offered to pay

Rs.1,15,000/-.

11. The counsel for the appellant/defendant is thus correct in his

contention that there is no evidence of rate of mesne profits. What needs to

be seen is whether in the facts and circumstances aforesaid, mesne profits are

to be confined to a rate enhanced by 15% per annum over the last paid rent

as per the judgments cited by the counsel for the appellant/defendant.

12. The facts which are not in dispute are (i) that the premises were let out

to the appellant/defendant with effect from 1st March, 2003 vide registered

lease deed for a term of four years and six months at a rent of Rs.35,000/-

per month to be enhanced by 15% every three years; (ii) that clause 3 of the

said lease deed was as under:

"3. That the tenure of the present lease, initially, shall be Four Years and Six Months, commencing from the date of the execution of the present Lease Deed, unless otherwise determined earlier, in terms of this lease, as appearing

hereinafter. Upon the expiry of the said lease tenure of Four Years and Six Months, the LESSOR shall be bound to extend/renew the lease for a further period of Four Years and Six Months, on a mere request on the part of the LESSEE, in that regard. The LESSEE shall have a further right/option, to get the present lease and/or such renewed/extended lease, as aforementioned, extended/renewed beyond the said period of Nine Years on such terms which may be mutually agreed between the parties herein. It is, however, expressly agreed between the parties herein, that such extension/renewal, shall be on such rent which is mutually agreed, at the time of the expiry of the said period of Nine Years, but such rent shall not exceed by 15% over and above the last drawn rent.";

(iii) that though after the initial period of four years and six months no

fresh lease deed was registered but according to the respondents/plaintiffs

also the lease in favour of the appellant/defendant in pursuance to the

aforesaid clause was extended till 29th February, 2012 and in the suit from

which this appeal arises instituted on 4th October, 2012, the claim of the

respondents/plaintiffs for mesne profits was from 1st March, 2012; (iv) that

the appellant/defendant contested the claim for ejectment (and which contest

now been given up) on the ground of, in accordance with the aforesaid

clause being entitled to continue in the premises thereafter also at an

increase in rent by 15% every three years; (v) the appellant/defendant did

not file any suit for specific performance of the aforesaid clause against the

respondents/plaintiffs.

13. I am of the opinion that though there is no evidence led by either party

of the prevalent letting value of the premises with effect from 1st March,

2012 but upon the appellant/defendant not enforcing the agreement

contained in clause 3 supra of the lease deed, of being entitled to continuing

in the premises at a rent enhanced by 15% every three years, the

appellant/defendant now cannot contend that the rate of mesne profits should

be confined thereto and by (on 25th August, 2015) offering to pay use and

occupation charges for future @ Rs.1 lakh per month have admitted the then

prevalent letting value of the premises to be at least that much. The question

which arises is, whether the said rate of Rs.1 lakh per month should be made

binding on the appellant/defendant with effect from 1st March, 2012 also.

14. According to the appellant/defendant, with effect from 1st March,

2012, they were in accordance with clause aforesaid of the lease deed liable

to pay mesne profits @ Rs.53,232/- per month only and with effect from 1st

March, 2015 would have become liable to mesne profits @ Rs.61,216.80

paise per month.

15. I am of the opinion that judicial notice can be taken of the normal

human conduct in such matters and the litigants should not be mechanically

deprived of the relief to which they are entitled to for the laxity on the part

of the Advocate conducting their case.

16. Had according to the respondents/plaintiffs the prevalent rent of the

premises with effect from 1st March, 2012 onwards been Rs.53,232/- per

month or thereabouts only, the respondents/plaintiffs for a commercial

premises of which they do not plead any need, would not have litigated and

would have agreed to the appellant continuing in the premises rather than

undertaking the costly lengthy litigation and becoming liable for additional

charges incurred in making the premises fit for fresh letting and for

brokerage etc. and taking the risk of the premises remaining vacant for some

time till the new tenant was found. Similarly, had the other similar premises

been available to the appellant/defendant at the rent of Rs.53,232/- which the

appellant/defendant was offering, the appellant/defendant also would not

have, inspite of being cautioned by the respondents/plaintiffs of incurring

the chance of becoming liable to pay at a rate of Rs.1,50,000/- per month,

continued in occupation of the subject premises. Of course, a commercial

enterprise has some inherent disturbance in changing its business premises.

However such disturbance would not outweigh the commercial risk which

the appellant/defendant took. It can thus safely be presumed that the

appellant/defendant took the said risk knowing that in the worst situation it

would be liable to pay the market rent only and which the

respondents/plaintiffs were demanding.

17. Applying the aforesaid logic and in the entirety of the facts, in my

view the decree, insofar as for mesne profits, should be converted from that

of mesne profits with effect from 1st March, 2012 @ Rs.1,50,000/- per

month to that for mesne profits @ Rs.1 lakh per month. Considering the fact

that the appellant/defendant has been making partial payments regularly, it is

also felt that no case for grant of any interest on the arrears of mesne profits

is made out.

18. Accordingly, the appeal is partially allowed. Insofar as the challenge

therein to the decree for mesne profits is concerned, the same is substituted

with a decree for mesne profits in favour of the respondents/plaintiffs and

against the appellant/defendant, with effect from 1st March, 2012 to April,

2016 @ Rs.1 lakh per month and with effect from May, 2016 to the month

of vacation as aforesaid @ Rs.1,55,250/- per month, less the amounts

already paid by the appellant/defendant. If the amount so due under the

decree is paid on or before 31st August, 2016, no interest would be payable

thereon. However, if it is not so paid, interest @ 9% per annum shall be

payable thereon from the end of each of the month for which the arrears of

mesne profits are due and till the date of payment. Needless to state that the

appellant/defendant before vacating the premises shall also clear all the

electricity, water, maintenance and other charges payable by it with respect

to the premises. Subject to the appellant/defendant doing the same and the

respondents/plaintiffs having no other claim deductable from the security

deposit against the appellant/defendant, the security deposit placed by the

appellant/defendant with the respondents/plaintiffs at the time of creation of

the lease deed, if had not been adjusted till now, shall be refunded by the

respondents/plaintiffs to the appellant/defendant at the time of vacation of

the premises. If the premises are not vacated on or before 31 st October,

2016, the said amount shall also stand forfeited.

No costs. Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J.

MAY 04, 2016 'bs' (corrected & released on 21st June, 2016)