SUMER CORPORATION versus VIJAY ANANT GANGAN & ORS. on 9 November 2022

Conclusion

1. Feeling aggrieved and dissatisfied with the impugned orderGpassed by the High Court of Judicature at Bombay dated 05.11.2020 inCivil Revision Application No. 357 of 2017 by which while admitting therevision application preferred by the contesting respondents herein –original revisionists against the judgment and decree passed by the H

Appellate Bench of the Court of Small Causes at Mumbai and whilestaying the judgment and decree passed by the Appellate Bench, theHigh Court has directed the respondent No. 1 - original revisionist todeposit Rs. 2,50,000/- per month towards the compensation/mesne profit,the original lessor has preferred the present appeal.

2. At the outset, it is required to be noted that the property inquestion is situated in Worli area of Mumbai, which is in the heart of thecity, at a very prominent place. The land on which the superstructure isconstructed by the lessor was leased by the lessee by Lease Deed dated16.08.1949 for a period of 30 years. The original lessee erected a buildingcomprising of ground and four upper storeys, known as “Garment House”.In front of the “Garment House”, there were two chawl-like structureshaving about 20 tenements. According to the original plaintiffs – lessors,on or about 22.01.1968, after the death of the original lessor, his legalheirs entered into a supplementary indenture of lease permitting the originallessee to demolish the old structures standing on the property and erectnew structures. The duration of the supplementary lease was for a periodof 98 years commencing from 01.02.1968.

2.1 On or about 01.04.1987, the original lessee died. The originallessee executed a last will and testament creating inter alia a charitabletrust and appointing the appellant herein and one Amritlal GordhandasJajal as executors and trustees. That thereafter in or about 1988, theeviction proceedings were initiated. By judgment and decree dated25.06.2004, the Trial Court dismissed the suit. The decree was challengedby the original plaintiffs before the Appellate Bench of the Court ofSmall Causes. During the pendency of the appeal, one Sumer Corporation,claiming to be a transferee of the suit property from the legal heirs of theoriginal lessors by a registered deed of conveyance, applied for joinderto the appeal. By its judgment and order dated 04.05.2017, the AppellateBench of the Small Causes Court allowed the appeal and set aside thedecree passed by the Trial Court and decreed the suit ordering evictionof the defendants (including the original revisionist).

2.2 Being aggrieved, the contesting respondents herein – originalrevisionist has filed the revision application before the High Court. Duringthe pendency of the Civil Revision Application (CRA), the appellant –Sumer Corporation applied for impleadment and was added as respondentNo. 19 to the CRA.

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2.3 At this stage, it is required to be noted that the appellant herein– Sumer Corporation, respondent No. 19 before the High Court is claimingto have right, title and interest in the suit property (lease) pursuant to thedeed of conveyance executed in the year 2008 for a sale considerationof Rs. 5.50 crores.

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B2.4 By the impugned order, while admitting the revision applicationpreferred by the original revisionist, who is aggrieved of the decree passedby the Appellate Bench of the Small Causes Court and while staying theeviction decree passed by the Appellate Bench, the High Court hasdirected the original revisionist to deposit Rs. 2,50,000/- per month towardscompensation as a condition of stay. The High Court has further directedCthe original revisionist to furnish a security for the arrears of compensationpayable from 02.04.2018 and till the date of the impugned order and asum of Rs. 77,55,000/- as by deposit of a fixed deposit receipt of likeamount endorsed in favour of the Registrar General of the High Court atBombay. The High Court has further directed that the aforesaidDcompensation shall be payable w.e.f. the date of passing of the order bythe Court, i.e., on or before 10[th] day of each succeeding month beginningfrom December 2020.

2.5 Feeling aggrieved and dissatisfied with the impugned order ofinterim compensation, the original respondent No. 19 has preferred theEpresent appeal.

3. Shri C.U. Singh, learned Senior Advocate appeared on behalfof the appellant and Shri Shekhar Naphade, learned Senior Advocatehas appeared on behalf of the contesting respondent – original revisionist.Shri Siddhartha Dave, learned Senior Advocate has appeared on behalfFof some of the respondents, who also claim right, title and interest in theproperty in question.

4. Shri C.U. Singh, learned Senior Advocate appearing on behalfof the appellant has vehemently submitted that in the facts andcircumstances of the case, the High Court has committed a very seriousGerror in directing the original revisionist to deposit the compensation @Rs. 2,50,000/- per month only while staying the judgment and order passedby the Appellate Bench.

4.1 It is vehemently submitted by Shri C.U. Singh, learned SeniorAdvocate appearing on behalf of the appellant that the method adopted H

by the High Court while determining the monthly compensation isuntenable and unsustainable. It is submitted that the High Court hasdetermined the monthly compensation by considering the amount paidby the appellant for the purchase of the property in question, i.e.,Rs. 5.50 crores and considering 6.5% return.

4.2 It is submitted that market value of the property at which thelessor and/or its subsequent purchaser acquired the property could notbe the basis for fixing the monthly compensation. It is submitted that asper the settled position of law, the valuation of the property on the dateof decree can be the relevant consideration for the purpose of determiningthe monthly compensation.

4.3 Relying upon the decision of this Court in the case of AtmaRam Properties (P) Ltd. Vs. Federal Motors (P) Ltd., (2005) 1SCC 705 (para 19), it is vehemently submitted by Shri C.U. Singh,learned Senior Advocate appearing on behalf of the appellant that asobserved by this Court while passing an order of stay, the AppellateCourt does have jurisdiction to put the applicant on such reasonableterms as would in its opinion reasonably compensate the decree-holderfor loss occasioned by delay in execution of decree by the grant of stayorder, in the event of the appeal being dismissed. It is further submittedthat as observed by this Court the tenant is liable to pay mesne profits/compensation for use and occupation of the premises at the same rateat which the landlord would have been able to let out the premises andearn rent if the tenant would have vacated the premises. The landlord isnot bound by the contractual rate of rent effective for the period precedingthe date of the decree.

4.4 It is submitted by Shri C.U. Singh, learned Senior Advocateappearing on behalf of the appellant that in the present case, the appellantproduced and relied upon the valuation report of one Mr. Maniyar, whoworked out the monthly compensation on the basis of the value of theproperty. It is submitted that as per the Valuation Report of Mr. Maniyar,the compensation could have been arrived at Rs. 67,76,038/- per month.It is submitted that, however, ignoring the detailed Valuation Report, ofMr. Maniyar, the High Court has determined a very meagre amounttowards compensation, i.e., Rs. 2,50,000/- per month with respect to thelands located in the heart of the city - at Worli and which is in the primelocation. It is submitted that therefore, fixing the compensation atRs. 2,50,000/- per month with respect to such a huge land situated in the A

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Aprime location would be unreasonable and therefore the same is liable tobe interfered with by this Court.

4.5 Shri C.U. Singh, learned senior counsel appearing on behalfof the appellant has submitted that the decision of this Court in the caseof Atma Ram Properties (P) Ltd. (supra) has been subsequentlyBfollowed by this Court in the case of State of Maharashtra and Anr.Vs. Super Max International Private Limited and Ors., (2009) 9SCC 772. It is submitted that in the subsequent decision in the case ofSuper Max International Private Limited and Ors. (supra), thisCourt has again reiterated the law laid down in the case of Atma RamProperties (P) Ltd. (supra).C4.6 Making above submissions, it is prayed to allow the presentappeal.

5. Shri Shekhar Naphade, learned Senior Advocate appearing onbehalf of the respondent No. 1- original revisionist has while opposingDthe submissions made on behalf of the appellant has submitted that thepower of the Appellate Court to award the compensation while stayingthe decree of eviction is not disputed. However, he has submitted thatthe compensation, which may be awarded shall be reasonable and maynot be excessive, even as observed by this Court in the case of AtmaRam Properties (P) Ltd. (supra) and Super Max InternationalEPrivate Limited and Ors., (supra). It is submitted that in the presentcase, the superstructure has been constructed by the lessee and only theland was leased. It is submitted that the decree has been passed withrespect to the land and not with respect to the superstructure. It issubmitted that therefore while fixing the monthly compensation, theFaforesaid aspect is required to be borne in mind.

5.1 It is submitted that in the present case, by giving a detailedreasoning, the Hon’ble High Court has discarded and/or not believed thevaluation report of Mr. Maniyar, relied upon by the appellant. It issubmitted that while determining compensation @ Rs. 67,76,038/-, theGvaluer has relied upon and had taken into consideration the ReadyReckoner rate of the land with applicable permissible FSI. It is submittedthat thereafter and after discarding the valuation report relied upon bythe appellant, considering the fair rate of return on the amount investedby the appellant @ 6.5% per annum comes out to Rs. 19,50,000/-.Therefore, the Hon’ble High Court has rightly determined the monthlyHcompensation @ Rs. 2,50,000/-, which can be said to be a reasonable SUMER CORPORATION v. VIJAY ANANT GANGAN & ORS.[M. R. SHAH, J.]

monthly compensation, which is not required to be interfered with bythis Court.

5.2 Making above submissions, it is prayed to dismiss the presentappeal.

6. Shri Siddhartha Dave, learned Senior Advocate appearing onbehalf of the proforma respondent, who was also claiming some right,title and interest in the property in question has supported the appellant.

7. Having heard the learned Senior Advocates appearing on behalfof the respective parties and having gone though the impugned orderpassed by the High Court determining the monthly compensation @Rs. 2,50,000/-, we are of the opinion that the approach adopted by theHigh Court is not a sound principle of law to form the basis for determiningthe compensation in this case. In the present case, while determining themonthly compensation, the High Court has considered the fair rate ofreturn @ 6.5% annually on the amount for which the appellant purchasedthe property in the year 2008, i.e., Rs. 5.50 crores. The aforesaid couldnot have been the basis while determining the monthly compensation. Ifthe approach adopted by the High Court is accepted and/or approved, ina given case, it may happen that the lessor might have purchased theproperty forty years back and/or long back and if the said approach isconsidered and thereafter the monthly compensation is determined, thesame cannot be said to be a reasonable compensation. The aforesaidwould be contrary to the law laid down by this Court in the case ofAtma Ram Properties (P) Ltd. (supra) and further reiterated by thisCourt in the case of Super Max International Private Limited andOrs., (supra).

7.1 As observed and held by this Court in the case of Atma RamProperties (P) Ltd. (supra), from the date of the decree of eviction,the tenant is liable to pay mesne profits or compensation for use andoccupation of the premises at the same rate at which the landlord wouldhave been able to let out the premises and earn rent if the tenant wouldhave vacated the premises. The landlord is not bound by the contractualrate of rent effective for the period preceding the date of the decree.

7.2 The decision in the case of Atma Ram Properties (P) Ltd.(supra) has been subsequently followed by this Court in the case ofSuper Max International Private Limited and Ors., (supra). In thesaid decision, it is further observed and held that in fixing the amount A

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Asubject to payment of which the execution of the order/decree is stayed,the Court would exercise restraint and would not fix any excessive,fanciful or punitive amount. Therefore, in a revision/appeal preferred bythe tenant, who has suffered an eviction decree, the appellate/revisionalcourt while staying the eviction decree can direct the tenant to pay thecompensation for use and occupation of the tenancy premises upon theBcontractual rate of rent and such compensation for use and occupationof the premises would be at the same rate at which the landlord wouldhave been able to let out the premises and earn rent if the tenant wouldhave vacated the premises. In the present case, the High Court has notdone that exercise and has determined the compensation consideringCthe market value / value at which original respondent No. 19 acquiredthe rights of the suit property for a sum of Rs. 5.50 cores and thereafter,considering estimated return @ 6.5% per annum, the High Court hasdetermined/awarded the compensation for use and occupation of thepremises by the tenant @ Rs. 2,50,000/- per month. The aforesaid methodadopted by the High Court while determining the compensation cannotDbe accepted. The High Court was required to undertake exercise and todetermine the compensation at the same rate at which the landlord wouldhave been able to let out the premises and earn rent if the tenant wouldhave vacated the premises.

7.3 Under the circumstances, the matter is to be remanded to theEHigh Court for fresh determination of the compensation for use andoccupation of the premises by the tenant, who has suffered the evictiondecree, during the pendency and the final disposal of the revisionapplication by the High Court.8. In view of the above and for the reasons stated above, theFpresent appeal succeeds in part. The impugned judgment and order passedby the High Court determining the compensation for the use andoccupation of the premises by the tenant @ Rs. 2,50,000/- per month ishereby quashed and set aside. The matter is remitted back to the HighCourt to determine the compensation for the use and occupation of theGpremises in question by the tenant/lessee afresh and taking intoconsideration the observations made hereinabove. For that purpose, theparties may be permitted to lead the evidence on the rate of rent thatwould have been earned by the landlord/lessor, if the lessor would havebeen able to let out the premises and earn rent if the tenant would havevacated the premises. The aforesaid exercise be completed within aH

SUMER CORPORATION v. VIJAY ANANT GANGAN & ORS.[M. R. SHAH, J.]

period of six months from the date of the receipt of the present order.Till a fresh decision on remand is taken by the High Court, by way ofinterim arrangement and subject to further decision that may be takenby the High Court on remand, we direct the respondent No. 1 to depositthe compensation at-least @ Rs. 2,50,000/- per month from the date ofpassing of the eviction decree, however, as observed hereinabove, thesame shall be subject to the final decision / determination of compensationon remand.

Present appeal is accordingly partly allowed to the aforesaidextent. No costs.

Devika Gujral

Appeal partly allowed.

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