1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION WRIT PETITION NO.3882 OF 2009 Dena Bank ...Petitioner vs. Matunga Gujarati Club Ltd. ...Respondent Mr.Prakash Shah i/b M/s.P.D.S. & Associates for the petitioner Mr.P.N.Shah for the respondent CORAM :A.S.OKA,J. DATE : AUGUST 20, 2009 P.C. 1 The submissions of the learned counsel for the parties were heard on the earlier date. With a view to appreciate the submissions, it will be necessary to advert the facts of the case in brief. By this writ petition under Article 227 of the Constitution of India the challenge is to the order of the Appellate Court by which pending an appeal preferred by the petitioner, the decree of eviction passed against the petitioner was stayed subject to the petitioner depositing compensation at the rate of Rs.100/- per square feet per month till the disposal of the Appeal. 2 The respondents are the original plaintiffs and the petitioner-bank is the original defendant. According to the case of the respondents, a lease was executed in the 2 year 1974 in favour of the petitioner in respect of the premises on the ground floor admeasuring 2157 sq.ft and the premises on the lower ground floor admeasuring 1954.75 sq. ft. in a building know as Matunga Gujrati Club situated near Arora Cinema, Matunga, Mumbai. According to the case of the respondent, in December 1995 a fresh lease was created in favour of the petitioner. The said lease expired by eflux of time on 30 th June 2003. 3 According to the respondent there were further negotiations with the petitioner. It is stated that on 13 th May 2003, rent was agreed to be paid at the rate of Rs.100/- per square feet. It was agreed in the meeting held on 30th December 2003 that the respondent would reduce the rent to Rs.55/- per square feet subject to the petitioner surrendering the possession of the basement (except locker room) admeasuring about 1300 sq. ft. According to the respondent, in the said meeting it was agreed that the lease will be for 10 years with 25% increase in the rent after every five years. The case of the respondent is that the fresh lease was not executed. Thereafter, there was exchange of correspondence. The respondent s Advocate called upon the petitioner by notice to vacate the premises. A suit for eviction was filed by the respondent raising a contention that in view of section 3(1) (b) of the 3 Maharashtra Rent Control Act,1999, the petitioner is not entitled to protection of the said rent control legislation. It was contended in the suit that the petitioner was liable to pay mesne profits at the rate of Rs.100/- per sq. ft which was the prevailing market rate of rent in the area. The suit was contested by the petitioner. After trial, the suit was decreed by the learned Judge of the Small Causes Court by Judgment and Decree dated 22 nd October 2008. The learned Judge directed the petitioner to pay the mesne profits quantified at Rs.43,94,797.55 from 1 st June 2004 till the filing of the suit. The trial court accepted the case made out by the respondent regarding entitlement to mesne profit at the rate of Rs.100/- per sq. ft. per month. An appeal was preferred by the petitioner before the Appellate Bench of Small Causes Court. The Appeal was admitted by order dated 9 th March 2009. An application for stay made by the petitioner was disposed of by granting the stay to the execution of the decree for possession subject to the petitioner depositing the decretal amount as per clause (3) of the operative part of the decree after deducting the amount already deposited in the court. Further condition imposed on the petitioner is that the petitioner will deposit the compensation amount at the rate of Rs.100/- per month from the date of the decree till the disposal of the appeal. It is this order dated 9 th March 2009 which is 4 subjected to challenge in this petition under Article 227 of the Constitution of India. 3 The learned counsel for the petitioner submitted that there is no basis for fixing the compensation at the rate of Rs.100/- sq. ft. per month. He submitted that even before the trial court no evidence was adduced by the respondent to show that the rent at the rate of Rs. 100/- per sq.ft per month was payable in respect of the similarly situated premises. He submitted that the petitioner is a public sector undertaking. He submitted that considering the fact that the petitioner bank is a public sector undertaking, the conditions imposed by the Appellate Court for grant of stay are very harsh and irrational. He submitted that the said conditions could not have been imposed. He submitted that the direction to pay the said huge amount could not have been passed during the pendency of the substantive appeal. 4 The learned counsel for the respondent submitted that the evidence was adduced before the trial court to show that the prevailing rate of rent was Rs.100/- per sq. ft. per month. He pointed out that the agreement recorded by the parties in the minutes dated 30 th December 2003 show that even the petitioner agreed to pay rent at the rate of Rs.100/- per sq. ft per month. He submitted that in fact during the trial of the suit, 5 there was no specific challenge to the case made out by the respondent that the prevailing rate of rent was Rs. 100/- per sq. ft. per month. He submitted that the conditions imposed by the Appellate Court is reasonable and no interference is called for. 5 I have given careful consideration to the submissions. Primafacie, it appears to me that the petitioner is not protected by the provisions of the said Act of 1999. There is a finding recorded by the trial court that the lease granted in favour of the petitioner expired by efflux of time on 30 th June 2003. 6 It will be necessary to refer to the decision of the Apex Court in case of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. [(2005) 1 SCC 705). It will be necessary to consider what is held by the Apex Court in paragraph 19 which reads thus : 19.To sum up,our conclusions are : (1)While passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure,1908, the appellate court does have jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed and insofar as those proceedings are concerned. Such terms, needless to say, shall be reasonable. (2)In case of premises governed by the provisions of the Delhi Rent Control Act,1958, in view of the definition of tenant contained in clause (1) of Section 2 of the Act, the 6 tenancy does not stand terminated merely by its termination under the general law; it terminates with the passing of the decree for eviction. With effect that date, the tenant is liable to pay mesne profits or compensation for use and occupation of the premises at the same rate at which the landlord would have been able to let out the premises and earn rent if the tenant would have vacated the premises. The landlord is not bound by the contractual rate of rent effective for the period preceding the date of the decree. (3)The doctrine of merger does not have the effect of postponing the date of termination of tenancy merely because the decree of eviction stands merged in the decree passed by the superior forum at a latter date. 7 It must be borne in mind that the Apex Court was dealing with the case where the tenant was protected under the provisions of the rent control legislation and in this case the court is dealing with a case where primafacie, the tenant does not have protection of the rent control legislation. There is a finding recorded to that effect by the trial court. 8 It will be necessary to refer to the averments made in the plaint. In paragraph 7 of the plaint it is specifically asserted by the respondent that the prevailing rate of rent was Rs.100/- per sq. ft. per month in the concerned locality. In paragraph 10 of the written statement there is only a general denial made by the petitioner of the said averments. The respondent examined one Hirenji Vasanji Shah by filing his affidavit in lieu of examination of chief. A specific 7 factual assertion is made in the said affidavit that prevailing rate of rent in the vicinity was Rs.100/- sq. ft. per month. Perusal of the cross examination of the said witness made by the petitioner shows that there is no specific challenge to the rate of rent asserted by the witness in the affidavit in lieu of examination of chief. It will be necessary to refer to the paragraph 20 of the Judgment of trial court in which the learned Trial Judge has observed that the evidence of the respondent on the aspect of prevailing market rate of rent has not been seriously challenged by the petitioner in the cross examination. Prima facie, the said finding appears to be correct. Apart from this, the minutes of the meeting held on 30 th December 2003 primafacie show that the parties had agreed at one point of time for fixing the rate of rent at Rs.100/- per sq. ft. per month. Considering the aforesaid factual aspects, it is difficult to find fault with the direction issued by the impugned order passed by the Appellate Court by which the stay has been granted subject to the petitioner complying with the money decree passed by the trial court and subject to complying with a direction issued to deposit the compensation amount at the rate of Rs.100/- per sq. ft. per month from the date of decree till the disposal of the Appeal. 9 Considering the facts and circumstances of the case, 8 the said conditions are reasonable and proper. It is obvious that the deposit of the amounts by the petitioner in terms of the impugned order is subject to final outcome of the pending appeal. 10 This was not a case where interference can be made in writ jurisdiction under Article 227 of the Constitution of India. Writ Petition is accordingly rejected. 11 By way of indulgence, time granted by the Appellate Court under the impunged order to deposit the arrears is extended by a period of eight weeks from today. JUDGE