Partly allowed

Muthoot Finance Limited v. Kailash Rani & Ors.

Delhi HC4 May 2016RFA/84/2015

Case brief

AI extract

What is this about?

In an appeal against a decree for ejectment and mesne profits, the High Court allowed the appeal in part. While dismissing the challenge to the ejectment, the Court substituted the mesne profits decree, reducing the award to Rs.1 lakh per month retroactively based on the appellant's conduct and lowering future rates to Rs.1.55 lakh/month upon his new tender.

What did the court decide?

The appeal against the mesne profits decree is partially allowed. The decree is modified to award Rs.1 lakh/month for the past period up to April 2016 and Rs.1.55 lakh/month for future months, less am

Muthoot Finance Limited Vs Kailash Rani & Ors. — Property and Title | Delhi HC (2016)

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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% Date of decision: 4^th May, 2016.

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

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MUTHOOT FINANCE LIMITED ..... Appellant Through: Mr. Ajay Kohli and Mr. S.S. Sobti, Advs.

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Versus

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KAILASH RANI & ORS ..... Respondents Through: Mr. Puneet Agrawal, Adv.

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CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

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This first appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) impugns the judgment and decree dated 31^st 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.

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RFA No.84/2015 Page 1 of 11

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The appeal came up first before the Court on 10^th 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 25^th 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 29^th April, 2016 and on completion of hearing, finding elements of amicable settlement to be still existing, the matter was adjourned to today.

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No compromise has been possible between the parties.

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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

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appellant is willing to pay to the respondents the market rent which the respondents are claiming i.e. Rs.1,55,250/- per month.

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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

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Page 2 of 11

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RFA No.84/2015

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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 10^th day of the month, time is given to the appellant till 31^st 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.

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

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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

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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.

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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

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RFA No.84/2015 Page 3 of 11

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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 1^st March, 2012 to 28^th February, 2013; Rs.61,217/- per month for the period from 1^st March, 2013 to 28^th February, 2014; Rs.70,400/- per month for the period from 1^st March, 2014 to 28^th February, 2015; Rs.80,960/- per month for the period from 1^st March, 2015 to 28^th February, 2016.

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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.

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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 RFA No.84/2015 Page 4 of 11

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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.

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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.

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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 RFA No.84/2015 Page 5 of 11

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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/-.

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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

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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.

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

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

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

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per month to be enhanced by 15% every three years; (ii) that clause 3 of the said lease deed was as under:

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“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

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Page 6 of 11

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RFA No.84/2015

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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.”;

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(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 29^th February, 2012 and in the suit from which this appeal arises instituted on 4^th October, 2012, the claim of the respondents/plaintiffs for mesne profits was from 1^st March, 2012; (iv) that

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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.

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RFA No.84/2015 Page 7 of 11

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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 1^st 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 25^th 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 1^st March, 2012 also.

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According to the appellant/defendant, with effect from 1^st 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 1^st March, 2015 would have become liable to mesne profits @ Rs.61,216.80 paise per month.

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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

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Page 8 of 11

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RFA No.84/2015

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deprived of the relief to which they are entitled to for the laxity on the part of the Advocate conducting their case.

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Had according to the respondents/plaintiffs the prevalent rent of the premises with effect from 1^st 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

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RFA No.84/2015 Page 9 of 11

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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.

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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 1^st 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.

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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

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against the appellant/defendant, with effect from 1^st 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 31^st August, 2016, no interest would be payable thereon. However, if it is not so paid, interest @ 9% per annum shall be RFA No.84/2015 Page 10 of 11

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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.

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No costs. Decree sheet be drawn up.

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RAJIV SAHAI ENDLAW, J.

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MAY 04, 2016 ‘bs’ (corrected & released on 21^st June, 2016)

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Page 11 of 11

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RFA No.84/2015

Muthoot Finance Limited v. Kailash Rani & Ors.

Case brief

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Muthoot Finance Limited v. Kailash Rani & Ors.

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