1 IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL ORIGINAL ORIGINAL CIVIL JURISDICTION CIVIL JURISDICTION CIVIL JURISDICTION CHAMBER CHAMBER CHAMBER SUMMONS SUMMONS SUMMONS NO.261 of 2007 NO.261 of 2007 NO.261 of 2007 IN IN IN SUIT SUIT SUIT NO.3853 NO.3853 NO.3853 OF 2002 OF 2002 OF 2002 Tarla Tarla Tarla N.Morjaria & ors N.Morjaria & ors N.Morjaria & ors ...... Plaintiffs Plaintiffs Plaintiffs vs vs vs Bipin Bipin Bipin Hiralal Shah & anr.. Hiralal Shah & anr.. Hiralal Shah & anr.. Defendants Defendants Defendants WITH WITH WITH CHAMBER CHAMBER CHAMBER SUMMONS NO. 351 OF 2006 SUMMONS NO. 351 OF 2006 SUMMONS NO. 351 OF 2006 IN IN IN SUIT SUIT SUIT NO.3853 NO.3853 NO.3853 OF 2004 OF 2004 OF 2004 Tarla Tarla Tarla N.Morjaria & ors N.Morjaria & ors N.Morjaria & ors . Plaintiffs Plaintiffs Plaintiffs vs vs vs Bipin Bipin Bipin Hiralal Shah & anr Hiralal Shah & anr Hiralal Shah & anr ..Defendants ..Defendants ..Defendants Mr.Sanjay Mr.Sanjay Mr.Sanjay Jain Jain Jain with Ms.K.A.Shah i/b A.G.Shah for with Ms.K.A.Shah i/b A.G.Shah for with Ms.K.A.Shah i/b A.G.Shah for Plffs Plffs Plffs Mr.Nilesh Mr.Nilesh Mr.Nilesh Modi Modi Modi a/w Ms.Deepali Thakor a/w Ms.Deepali Thakor a/w Ms.Deepali Thakor i.b i.b i.b Rustamji Rustamji Rustamji & Ginwala for Defendants & Ginwala for Defendants & Ginwala for Defendants CORAM CORAM CORAM : : : A.M.KHANWILKAR, J A.M.KHANWILKAR, J A.M.KHANWILKAR, J DATE DATE DATE : 28th March, 2007 : 28th March, 2007 : 28th March, 2007 P.C. P.C. P.C. 1.1.1. This order will dispose of both the Chamber This order will dispose of both the Chamber This order will dispose of both the Chamber Summons Summons Summons taken out by the respective parties. Both taken out by the respective parties. Both taken out by the respective parties. Both the the the parties seek to challenge the correctness of parties seek to challenge the correctness of parties seek to challenge the correctness of the the the view taken by the Court Receiver in his order view taken by the Court Receiver in his order view taken by the Court Receiver in his order dated dated dated 2nd February 2007 determining the royalty 2nd February 2007 determining the royalty 2nd February 2007 determining the royalty amount amount amount in respect of the disputed property at the in respect of the disputed property at the in respect of the disputed property at the rate rate rate of Rs.4900/- p.m. For reaching that of Rs.4900/- p.m. For reaching that of Rs.4900/- p.m. For reaching that conclusion, conclusion, conclusion, the Court Receiver has taken into the Court Receiver has taken into the Court Receiver has taken into account account account the the the valuation of the suit property which is valuation of the suit property which is valuation of the suit property which is 1 room admeasuring 198 sq.feet built up area (i.e. room admeasuring 198 sq.feet built up area (i.e. room admeasuring 198 sq.feet built up area (i.e. 165 165 165 sq.ft carpet area) as Rs.6,50,000/-. He has sq.ft carpet area) as Rs.6,50,000/-. He has sq.ft carpet area) as Rs.6,50,000/-. He has 2 then then then provided provided provided for depreciation at the rate of of 20 for depreciation at the rate of of 20 for depreciation at the rate of of 20 % thereon. On that depreciated value, he has thereon. On that depreciated value, he has thereon. On that depreciated value, he has provided provided provided for return at the rate of 9 % pa, thus for return at the rate of 9 % pa, thus for return at the rate of 9 % pa, thus rounded rounded rounded up royalty amount as Rs.4,900/- p.m. up royalty amount as Rs.4,900/- p.m. up royalty amount as Rs.4,900/- p.m. 2.2.2. According to the defendants, the amount of According to the defendants, the amount of According to the defendants, the amount of royalty royalty royalty so determined by the Court Receiver is so determined by the Court Receiver is so determined by the Court Receiver is excessive excessive excessive whereas the plaintiff would contend that whereas the plaintiff would contend that whereas the plaintiff would contend that the the the said amount is inadequate. said amount is inadequate. said amount is inadequate. 3.3.3. According to the plaintiffs, the royalty amount According to the plaintiffs, the royalty amount According to the plaintiffs, the royalty amount should should should be be be not less than Rs.9,653/-p.m. This figure not less than Rs.9,653/-p.m. This figure not less than Rs.9,653/-p.m. This figure isisis arrived at by the plaintiffs on first arrived at by the plaintiffs on first arrived at by the plaintiffs on first considering considering considering the valuation of the property on the the valuation of the property on the the valuation of the property on the basis basis basis of Ready Reckoner and then providing 50 % of Ready Reckoner and then providing 50 % of Ready Reckoner and then providing 50 % depreciation depreciation depreciation on on on the construction cost thereof. The the construction cost thereof. The the construction cost thereof. The valuation valuation valuation of the property in the Ready Reckoner is of the property in the Ready Reckoner is of the property in the Ready Reckoner is Rs.53,000/- Rs.53,000/- Rs.53,000/- per sq.metre. The construction cost per sq.metre. The construction cost per sq.metre. The construction cost according according according to to to the plaintiffs will have to be assumed the plaintiffs will have to be assumed the plaintiffs will have to be assumed atatat Rs.1000/- per sq.ft. The plaintiff in addition Rs.1000/- per sq.ft. The plaintiff in addition Rs.1000/- per sq.ft. The plaintiff in addition relied relied relied on the valuation report which is Exhibit N on the valuation report which is Exhibit N on the valuation report which is Exhibit N toto to the plaint to butress this submission. In the plaint to butress this submission. In the plaint to butress this submission. In addition, addition, addition, reliance is placed on the document/sale reliance is placed on the document/sale reliance is placed on the document/sale instance instance instance of properties in the vicinity which is of properties in the vicinity which is of properties in the vicinity which is around around around Rs.6531/- to Rs.7,387/- per sq.ft. Rs.6531/- to Rs.7,387/- per sq.ft. Rs.6531/- to Rs.7,387/- per sq.ft. 4.4.4. According to the defendants, there is fallacy According to the defendants, there is fallacy According to the defendants, there is fallacy inin in the argument of the plaintiffs that the the argument of the plaintiffs that the the argument of the plaintiffs that the depreciation depreciation depreciation to be provided on the valuation given to be provided on the valuation given to be provided on the valuation given by by by the the the Ready Reckoner should be on the construction Ready Reckoner should be on the construction Ready Reckoner should be on the construction 3 cost cost cost of Rs.1000/- per sq.metre. Whereas, the of Rs.1000/- per sq.metre. Whereas, the of Rs.1000/- per sq.metre. Whereas, the depreciation depreciation depreciation should be on the entire valuation should be on the entire valuation should be on the entire valuation amount amount amount specified in the Ready Reckoner. Reliance specified in the Ready Reckoner. Reliance specified in the Ready Reckoner. Reliance isisis placed by the defendants on guideline 4 of the placed by the defendants on guideline 4 of the placed by the defendants on guideline 4 of the Ready Ready Ready Reckoner to support their submission. It is Reckoner to support their submission. It is Reckoner to support their submission. It is the the the case case case of the defendants that the monthly rent in of the defendants that the monthly rent in of the defendants that the monthly rent in respect respect respect of the disputed premises in no case shall of the disputed premises in no case shall of the disputed premises in no case shall exceed exceed exceed Rs.3,127/- p.m. Rs.3,127/- p.m. Rs.3,127/- p.m., as calculated in as calculated in as calculated in computation computation computation Exhibit 5 at page 45. Exhibit 5 at page 45. Exhibit 5 at page 45. 5.5.5. Having considered the rival submissions, there Having considered the rival submissions, there Having considered the rival submissions, there isisis substance in the grievance of both the sides substance in the grievance of both the sides substance in the grievance of both the sides that that that the the the Court Receiver has not indicated the basis Court Receiver has not indicated the basis Court Receiver has not indicated the basis on on on which he has assumed the valuation of the suit which he has assumed the valuation of the suit which he has assumed the valuation of the suit property property property at Rs.6,50,000/- or for that matter the at Rs.6,50,000/- or for that matter the at Rs.6,50,000/- or for that matter the depreciation depreciation depreciation at at at the rate of 20 %. By no standards, the rate of 20 %. By no standards, the rate of 20 %. By no standards, figure figure figure of Rs.6,50,000/- is in accord with the of Rs.6,50,000/- is in accord with the of Rs.6,50,000/- is in accord with the assumed assumed assumed valuation in respect of the property as valuation in respect of the property as valuation in respect of the property as provided provided provided in the Ready Reckoner. At the same time, in the Ready Reckoner. At the same time, in the Ready Reckoner. At the same time, there there there can be no difficulty in accepting the can be no difficulty in accepting the can be no difficulty in accepting the approach approach approach of the Court Receiver that valuation of of the Court Receiver that valuation of of the Court Receiver that valuation of the the the property can be founded on the rates specified property can be founded on the rates specified property can be founded on the rates specified inin in the Ready Reckoner. the Ready Reckoner. the Ready Reckoner. 6.6.6. In the present case, it is not in dispute that In the present case, it is not in dispute that In the present case, it is not in dispute that the the the building is old building. The age of the building is old building. The age of the building is old building. The age of the building building building is stated to be over 75 years. is stated to be over 75 years. is stated to be over 75 years. Accordingly, Accordingly, Accordingly, if we were to invoke valuation of the if we were to invoke valuation of the if we were to invoke valuation of the building building building provided under the Ready Reckoner, it will provided under the Ready Reckoner, it will provided under the Ready Reckoner, it will be be be at the rate of Rs.53,000/- per.sq.metre. That at the rate of Rs.53,000/- per.sq.metre. That at the rate of Rs.53,000/- per.sq.metre. That 4 means, means, means, for for for the premises admeasuring 198 sq.ft built the premises admeasuring 198 sq.ft built the premises admeasuring 198 sq.ft built up up up (165 sq.ft carpet area) valuation would be (165 sq.ft carpet area) valuation would be (165 sq.ft carpet area) valuation would be Rs.9,26,440/-. Rs.9,26,440/-. Rs.9,26,440/-. Indeed, this valuation is notional Indeed, this valuation is notional Indeed, this valuation is notional valuation valuation valuation for the purposes of paying stamp duty on for the purposes of paying stamp duty on for the purposes of paying stamp duty on the the the agreement. Point 4 however, further provides agreement. Point 4 however, further provides agreement. Point 4 however, further provides that that that depreciation rates should be provided in depreciation rates should be provided in depreciation rates should be provided in respect respect respect of old buildings. Different depreciation of old buildings. Different depreciation of old buildings. Different depreciation rates rates rates are provided in respect of buildings are provided in respect of buildings are provided in respect of buildings depending depending depending upon the age of the building. If the upon the age of the building. If the upon the age of the building. If the building building building is above 40 years, the depreciation to be is above 40 years, the depreciation to be is above 40 years, the depreciation to be provided provided provided is specified at 50 %. If this is specified at 50 %. If this is specified at 50 %. If this depreciation depreciation depreciation at the rate of 50 % is to be provided at the rate of 50 % is to be provided at the rate of 50 % is to be provided inin in that case, valuation of the suit premises will that case, valuation of the suit premises will that case, valuation of the suit premises will have have have to be assumed as Rs.4,63,220/-. to be assumed as Rs.4,63,220/-. to be assumed as Rs.4,63,220/-. 7.7.7. However, counsel for the plaintiffs would argue However, counsel for the plaintiffs would argue However, counsel for the plaintiffs would argue that that that the the the depreciation will have to be provided only depreciation will have to be provided only depreciation will have to be provided only on on on the construction cost and not on the entire the construction cost and not on the entire the construction cost and not on the entire property. property. property. He further submits that construction He further submits that construction He further submits that construction cost cost cost in respect of the building will have to be in respect of the building will have to be in respect of the building will have to be assumed assumed assumed as as as Rs.1000/-sq.ft. To support the argument Rs.1000/-sq.ft. To support the argument Rs.1000/-sq.ft. To support the argument that that that construction cost will have to be assumed at construction cost will have to be assumed at construction cost will have to be assumed at Rs.1000/- Rs.1000/- Rs.1000/- per.sq.ft, per.sq.ft, per.sq.ft, reliance is placed on item no. reliance is placed on item no. reliance is placed on item no. 9 of the guidelines to be read along with item of the guidelines to be read along with item of the guidelines to be read along with item no.7. no.7. no.7. On the other hand, counsel for the On the other hand, counsel for the On the other hand, counsel for the defendants defendants defendants placed reliance on point (i) below item placed reliance on point (i) below item placed reliance on point (i) below item no.4 no.4 no.4 of the guidelines which reads as follows : of the guidelines which reads as follows : of the guidelines which reads as follows : " While valuing old property if valuation While valuing old property if valuation While valuing old property if valuation arrived arrived arrived after allowing depreciation is less after allowing depreciation is less after allowing depreciation is less than than than the developed land value, then the developed land value, then the developed land value, then valuation valuation valuation should should should be done as per point no.7." be done as per point no.7." be done as per point no.7." (Land (Land (Land plus plus plus construction cost.) construction cost.) construction cost.) 5 Both Both Both arguments arguments arguments will have to be discarded on the will have to be discarded on the will have to be discarded on the reasoning reasoning reasoning that the Court Receiver was not called that the Court Receiver was not called that the Court Receiver was not called upon upon upon to decide the stamp duty payable on the to decide the stamp duty payable on the to decide the stamp duty payable on the property, property, property, but but but to determine the royalty amount which to determine the royalty amount which to determine the royalty amount which will will will be just and reasonable. As is mentioned be just and reasonable. As is mentioned be just and reasonable. As is mentioned earlier, earlier, earlier, the building is very old about 75 years. the building is very old about 75 years. the building is very old about 75 years. IfIfIf so, the royalty rate determined by the Court so, the royalty rate determined by the Court so, the royalty rate determined by the Court Receiver Receiver Receiver in the sum of Rs.4,900/- per month for an in the sum of Rs.4,900/- per month for an in the sum of Rs.4,900/- per month for an accommodation accommodation accommodation (one room admeasuring 165 sq.ft (one room admeasuring 165 sq.ft (one room admeasuring 165 sq.ft carpet carpet carpet area) in my opinion, warrants no area) in my opinion, warrants no area) in my opinion, warrants no interference, interference, interference, on such technical argument. As the on such technical argument. As the on such technical argument. As the amount amount amount decided decided decided by the Court Receiver cannot be said by the Court Receiver cannot be said by the Court Receiver cannot be said toto to be either excessive or grossly inadequate, it is be either excessive or grossly inadequate, it is be either excessive or grossly inadequate, it is not not not necessary for this court to re-consider that necessary for this court to re-consider that necessary for this court to re-consider that rate rate rate of royalty. Indeed, Court Receiver while of royalty. Indeed, Court Receiver while of royalty. Indeed, Court Receiver while determining determining determining the royalty amount has to apply some the royalty amount has to apply some the royalty amount has to apply some norms norms norms and and and principles. But, that does not mean that principles. But, that does not mean that principles. But, that does not mean that the the the amount arrived at by him should have amount arrived at by him should have amount arrived at by him should have arithmetical arithmetical arithmetical exactitude which is the attempt of exactitude which is the attempt of exactitude which is the attempt of both both both the counsel. the counsel. the counsel. I am inclined to uphold the royalty amount am inclined to uphold the royalty amount am inclined to uphold the royalty amount determined determined determined by by by the Court Receiver as I find that the the Court Receiver as I find that the the Court Receiver as I find that the same same same is is is just as it is between the two extreme views just as it is between the two extreme views just as it is between the two extreme views projeccted projeccted projeccted by the parties.For, if the calculation by the parties.For, if the calculation by the parties.For, if the calculation given given given by the plaintiffs were to be considered, the by the plaintiffs were to be considered, the by the plaintiffs were to be considered, the amount amount amount will be around Rs.9,653/-, whereas if will be around Rs.9,653/-, whereas if will be around Rs.9,653/-, whereas if calculation calculation calculation given by the defendants were to be given by the defendants were to be given by the defendants were to be accepted, accepted, accepted, the amount will work out to Rs.3,127/-. the amount will work out to Rs.3,127/-. the amount will work out to Rs.3,127/-. Since Since Since the amount determined by the Court Receiver the amount determined by the Court Receiver the amount determined by the Court Receiver 6 isisis almost in between both these amounts and having almost in between both these amounts and having almost in between both these amounts and having regard regard regard to thefact that the building is as old as 75 to thefact that the building is as old as 75 to thefact that the building is as old as 75 years, years, years, it is not a case of gross over-valuing or it is not a case of gross over-valuing or it is not a case of gross over-valuing or undervaluing undervaluing undervaluing the royalty amount. It cannot be the royalty amount. It cannot be the royalty amount. It cannot be overlookedthat overlookedthat overlookedthat neither party has produced or neither party has produced or neither party has produced or invited invited invited my attention to any material to establish my attention to any material to establish my attention to any material to establish the the the prevailing market compensation of comparable prevailing market compensation of comparable prevailing market compensation of comparable premises. premises. premises. Besides, this amount is only tentative Besides, this amount is only tentative Besides, this amount is only tentative; as, as, as, if the plaintiff succeeds in the suit, he if the plaintiff succeeds in the suit, he if the plaintiff succeeds in the suit, he would would would get relief of appropriate amount of mesne get relief of appropriate amount of mesne get relief of appropriate amount of mesne profits profits profits and if the defendants were to succeed in and if the defendants were to succeed in and if the defendants were to succeed in that that that case they may not be liable to pay any amount case they may not be liable to pay any amount case they may not be liable to pay any amount exceeding exceeding exceeding Rs.250/- p.m. towards rent. All those Rs.250/- p.m. towards rent. All those Rs.250/- p.m. towards rent. All those issues issues issues will have to be decided in the suit on its will have to be decided in the suit on its will have to be decided in the suit on its own own own merits. merits. merits. That being so, merely because there is That being so, merely because there is That being so, merely because there is some some some error here or there, that alone need not be error here or there, that alone need not be error here or there, that alone need not be the the the basis for interference by this Court in basis for interference by this Court in basis for interference by this Court in relation relation relation to the order passed by the Court Receiver to the order passed by the Court Receiver to the order passed by the Court Receiver determining determining determining the royalty amount. the royalty amount. the royalty amount. 8.8.8. In the circumstances, both the Chamber Summons In the circumstances, both the Chamber Summons In the circumstances, both the Chamber Summons are are are dismissed. dismissed. dismissed. 9.9.9. Consequently, order of the Court Receiver Consequently, order of the Court Receiver Consequently, order of the Court Receiver determining determining determining royalty amount in the sum of royalty amount in the sum of royalty amount in the sum of Rs.4900/-p.m. Rs.4900/-p.m. Rs.4900/-p.m. in respect of the suit premises is in respect of the suit premises is in respect of the suit premises is upheld. upheld. upheld. 10. 10. 10. Since the challenge of the defendants with Since the challenge of the defendants with Since the challenge of the defendants with regard regard regard to the royalty amount has been rejected by to the royalty amount has been rejected by to the royalty amount has been rejected by 7 this this this order in the interest of justice the order in the interest of justice the order in the interest of justice the defendants defendants defendants are given four weeks time from today to are given four weeks time from today to are given four weeks time from today to pay pay pay the same, failing which Court Receiver shall the same, failing which Court Receiver shall the same, failing which Court Receiver shall proceed proceed proceed to take physical possession of the suit to take physical possession of the suit to take physical possession of the suit premises premises premises forthwith without inviting further forthwith without inviting further forthwith without