Union Bank of India Vs Mr. M..M. Kodandaram

THIS RFA IS FILED UNDER SECTION 96 READ WITH ORDER XLI AND RULE 1 OF THE CODE OF CIVIL PROCEDURE, 1908, PRAYING TO ALLOW APPEAL WITH COSTS AND SET ASIDE JUDGMENT AND DECREE DATED 29.06.2017 PASSED IN O.S. NO.8585/2011 ON THE FILE OF TE XXII ADDITIONAL CITY CIVIL & SESSIONS JUDGE (CCH - VII) AT BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY.

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THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE RAVI V HOSMANI

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ORAL JUDGMENT

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Though matter is listed for orders, with consent of learned counsel for parties, same is taken up for disposal as appeal is admitted and paper books are filed.

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Challenging judgment and decree dated 29.06.2017 passed by XXII Additional City Civil and Sessions Judge, Bengaluru (CCH-7), in O.S. no.8585/2011, this appeal is filed.

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Sri P. L. Vijaykumar, learned counsel for appellants submitted that this appeal is by defendant no.2 in O.S.no.8585/2011 which was filed by respondent-plaintiff seeking for judgment and decree of eviction and for mesne profits against defendants i.e., Union Bank of India and its Branch in suit property. Mesne profits was claimed at rate of

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Rs.90,000/- per month from date of suit till date of delivery of possession of suit property.

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In plaint, it was stated that plaintiff was owner of

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non-residential immovable property bearing Corporation No. 10 by name ‘Sri Complex’ Hanumantharaya Temple Street, BVK Iyengar Road, Bangalore, comprising of ground, First, Second and Third floors. It was stated that plaintiff inducted defendant as lessee, in respect of First and Second Floor (referred to as

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‘ suit property ’), in terms of registered lease deed dated 02.08.1991 for a period of 10 years commencing from 02.01.1991 till 03.01.2001. It was submitted that on expiry of said lease period, under lease deed dated 28.11.2003 period of lease was extended for further period of 10 years from 02.08.2001. It was stated that last paid rent was Rs.26,856/-. It was submitted, even said lease expired on 01.08.2011 and though plaintiff had expressed intention to renew lease with 25% increase in rent, there was no response. Therefore, on 17.10.2011 plaintiff issued a legal notice calling upon defendant

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to quit and hand over vacant possession of suit premises. It was submitted, though notice was duly served, defendants

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failed to evict and hand over vacant possession constraining plaintiff to file suit.

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It was stated that suit premises was a nonresidential commercial property and since defendants had continued in occupation even after expiry of period of lease and its termination, plaintiff was entitled for mesne profits at rate of Rs.90,000/- per month.

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On service of suit summons, only defendant no.2 entered appearance and filed written statement. Defendant no.1 was placed ex parte . In its written statement defendant no.2 admitted averments in plaint paragraphs no.1 to 3. Even correspondence for renewal was admitted. It was, however, stated that defendant no.2 was trying to re-locate to bigger accommodation for their Bank and defendant no.2 had sought for six months' time to vacate premises. Subsequently, defendant no. 2 filed additional written statement opposing plaintiff's claim for mesne profits by claiming itself to be a statutory tenant by ‘ holding over’ .

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It was stated, defendant filed a memo dated 10.04.2013 stating that defendants had handed over

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possession of suit property to plaintiff on 25.03.2013 and had also settled plaintiff's claim for expenses towards minor repairs. On said grounds, sought for dismissal of suit.

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8. Based on pleadings, Trial Court framed following

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issues:

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Whether the plaintiff proves that the lease of suit property in favour of defendants is terminated as per Law?

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Whether the plaintiff is entitled to mesne profits of Rs.90,000/- per month, from the date of termination of lease, till delivery of vacant possession of suit property by defendants to plaintiff?

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Whether the defendants prove that the suit in respect of ejectment of defendants from suit property has become infructuous, on the ground that defendants delivered possession of suit property to plaintiff?

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What decree or order?

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Thereafter plaintiff examined himself as PW1 and

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got marked Exs.P1 to P14. Defendants examined two witnesses

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as DW1 and DW2, but did not mark any documents. On consideration, Trial Court answered issues no.1 and 3, issues no.2 and 4 by decreeing suit, holding plaintiff entitled for

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mesne profits at rate of Rs.35,000/- per month from date of suit i.e., 05.12.2011 till date of delivery of possession i.e. 25.03.2013. Aggrieved thereby present appeal was filed.

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It was submitted relationship of plaintiff and defendant no.2 as lessor and lessee initially under registered lease agreement dated 02.08.1991 and thereafter under renewal lease agreement dated 28.11.2003 extending lease upto 01.08.2011, defendant no.2 continuing thereafter as well as about last paid rent being Rs.26,856/-, is not in dispute. It was submitted that during pendency of suit, defendants had vacated premises on 01.07.2012. Though same was informed to plaintiff, he did not take possession. Therefore, Memo was filed on 23.11.2012 before Trial Court for permission to deposit

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keys of premises before Court. Subsequently, on 25.03.2013, defendant no.2 handed over possession and plaintiff accepted same and a Memo to said effect was filed before trial Court on 10.04.2013. Thus, there was no dispute about defendant no.2 having vacated premises, only issue would be about its liability to pay mesne profits.

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It was submitted that since defendant no.2 had continued after expiry of lease, it would require to be considered as statutory tenant as per Section 116 of Transfer of Property Act, 1882 (for short, ‘ Act ’) by ‘ holding over’ and its liability would be only to pay rent at then prevailing rate of Rs.26,856/-.

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But, Trial Court had assessed mesne profits at Rs.35,000/- without any basis. It was submitted that there was no dispute about defendant no.2 having paid rent upto 25.03.2013 Thus, ingredients of Section 116 of Act having been satisfied, there was no justification for trial Court to pass impugned judgment and decree. On said ground sought for allowing appeal.

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On other hand, learned counsel for plaintiff sought to support impugned judgment and decree and sought for dismissal of appeal.

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Heard learned counsel on both sides.

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From above it is seen, there is no dispute about plaintiff being owner of suit property and about same being

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leased to defendants and used by defendant no.2 to run its Banking operations. There is no dispute that period of lease was from 02.01.1991 for a period of 10 years and renewed thereafter under agreement dated 28.11.2003 for a period of 10 years from 01.08.2011. There is also no dispute about expiry of lease on 01.08.2011. Though there is concurrence between parties about correspondence for further renewal, admittedly there is no renewal. While, plaintiff claims to have issued notice dated 17.10.2011, marked as Ex.P12 and same is served on defendants as per Exs.P13 and 14, postal acknowledgment cards, wherein he had called upon defendants to quit, vacate and hand over possession of premises. Only contention of defendant no.2 against impugned judgment and decree is about its liability to pay mesne profits as awarded by Trial Court.

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It is contended that liability of defendant no.2 cannot be more than rent at than prevailing rent at Rs.26,856/. Said contention is advanced on basis of Section 116 of Act, which reads as follows:

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“Section 116 of the Transfer of Property Act, 1882 (India Code) establishes the legal concept of "holding

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over," where a lease is automatically renewed if a tenant continues to possess the property after the lease term ends, and the landlord accepts rent or otherwise assents to the tenant's continued possession. This creates a new lease, either year-to-year or month-to-month, depending on the original purpose of the lease, unless a contrary agreement exists.”

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Referring to para-2 of additional written statement

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filed, defendant no.2 contends that a specific contention about defendant no.2 having continued as a statutory tenant by ‘ holding over ’ was urged. Para-2 of additional written statement reads as follows:

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“2. The written statement on behalf of the defendant are already filed and the only contentions of the defendant were that they are the statutory contentions and hence question of paying the damages at the rate of Rs.90,000/(Rupees Ninety Thousand) per month in the place of Rs.26,000/- (Rupees Twenty Six Thousand) per month in the form of rent as well as arrears will not arise.”

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A perusal of Section 116 would reveal that in order to invoke said provision, two requirements are to be satisfied. Firstly that lessee had remained in possession after determination of lease and lessor accepted rent from lessee or otherwise assented to be continuing in possession, and in absence of an agreement to contrary, there would be deemed renewal of lease from year to year or month to month, as per purpose for which property is leased.

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Though in para-2 of additional written statement,

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there is assertion about ‘ holding over’ , there is no specific plea about defendant having continued to pay rent either in written statement or in additional written statement.

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In course of his deposition, PW.1 has reiterated plaint averments and produced documents, such as lease agreements, passbook, correspondence, legal notice, postal acknowledgments etc. Plaintiff has stated that quit notice was issued as per Ex.P12 and served on defendants as per Exs.P13 and P14. During cross-examination of PW.1, defendant no.2 has suggested that he was paying rent of Rs.21,485/- from 02.08.1991 till 01.08.2001 and rent for next period of 10 years from 01.08.2001 to 01.08.2011, it was Rs.26,856/-.

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Suggestion about defendant no.2 having called upon plaintiff to take key of suit premises on 25.06.2012 is denied. However, receipt of keys of suit premises from defendant no.2 on 25.03.2013 is accepted.

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Suggestion about plaintiff not being entitled for mesne profits of Rs.90,000/- per month @ of Rs.50/- per square feet is denied. Suggestion about delay in accepting key

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was due to fault of plaintiff is also denied. As noted by Trial Court, witness examined as DW.1 after filing affidavit evidence did not turn up for cross-examination and his deposition is eschewed.

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DW.2 in his deposition stated that first lease deed was executed in favour of defendant - Bank on 02.08.1991 for period of 10 years and same was renewed for another period of 10 years on 28.11.2003 and tenancy was in force till its expiry on 01.08.2011. There is also admission about receipt of quit notice dated 17.10.2011 issued by plaintiff and there is assertion about reply filed by defendant that claiming for short time to vacate premises. DW.2 has specifically deposed as "later bank has handed over possession to plaintiff on 25.03.2013 and said contention of having taken possession by plaintiff is also filed by me in form of memo before this court on 10.04.2013" .

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In cross-examination, it is elicited that period of lease expired on 01.08.2011 and even admission about receipt of Ex.P12 is also elicited. DW.2 admits that BVK Iyengar Road is a prime location in Bangalore. He however denies that

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Ground floor of said premises let out to one Ramlal Choudhary was fetching rent of Rs.66.5/- per square feet and also about rent of premises leased out to Bank was fetching Rs.50/- per square feet after termination of tenancy.

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While passing impugned judgment and decree, trial Court has adverted to rival contentions insofar as termination of tenancy and handing over possession as well as entitlement of plaintiff for mesne profits. Since there was no dispute about defendant having held continued in possession even after admitted expiry of lease, it held plaintiff being entitled for mesne profits. It adverted to plaintiff's claim for damages at Rs.90,000/- per month on basis of rent of Ground floor of said premises let out to Ramlal Choudhary. It however held quantum of Rs.90,000/- per month as mesne profits as not substantiated. Taking note of location of suit property as prime area and last paid rent at Rs.26,856/- and fact that possession was delivered on 25.03.2013 about 2 years after expiry of lease, determined mesne profits at rate of Rs.35,000/- per month.

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From above it is seen that while passing impugned judgment, trial Court has determined mesne profits at Rs.35,000/- per month by referring to admitted rent being paid at time of expiry of lease and date on which possession was handed over. It is seen that mesne profits awarded at Rs.35,000/- per month is about 30% more than last paid rent and clause (7) of Ex.P1 -registered lease agreement dated 28.11.2003 provided for escalation of rent at 25% of last paid rent of Rs.26,856/- in case of further renewal which would be for period subsequent to 01.08.2011. Therefore, defendant no.2 would not be entitled to succeed either on basis of Section 116 of Transfer of Property Act, 1882 or on quantum.

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In view of fact that question involved herein was on law, detailed reference to deposition and exhibits is not called for.

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For aforesaid reason, appeal fails and is dismissed .

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Sd/(RAVI V HOSMANI) JUDGE

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HNM/GRD

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List No.: 1 Sl No.: 6

Union Bank of India v. Mr. M..M. Kodandaram

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Union Bank of India v. Mr. M..M. Kodandaram

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