1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION WRIT PETITION NO.3088 OF 2009 Katwanilam Pvt.Ltd. & others ...Petitioners vs. Charulata J. Bhatia & Others ...Respondents Mr.R.V.Govilkar i/b Mr.H.T.Pawar for petitioners Mr.Chirayu J. Bhatia respondent no.3 in person CORAM :A.S.OKA,J. DATE : AUGUST 14, 2009 P.C. 1 Heard the learned counsel for the petitioner. By this petition under Article 227 of the Constitution of India, the petitioners have taken an exception to the Judgment and order dated 6 th January 2009 by which the Appellate Bench of Small Causes Court granted stay to execution of the decree of eviction passed against the petitioner subject to the petitioners depositing monthly compensation of Rs.5,000/- from the date of decree till the decision of the appeal along with the costs of the suit. The challenge in this petition is to that part of the impugned order by which condition was imposed by the Appellate Bench to pay Rs.5000/- per month. 2 With a view to appreciate the submissions made by the learned counsel for the petitioners, it will be necessary to refer to the facts of 2 the case in brief. 3 Respondent Nos.1 to 5 are the original plaintiffs who filed a suit for eviction against the petitioners and other defendants. The 6 th respondent herein is the first defendant in the said suit. The first petitioner is the 3 rd defendant and the second petitioner is the 5 th defendant in the suit. The third petitioner is the sixth defendant. The case is made out in the plaint is that the first defendant (6 th respondent) was the original tenant in respect of the suit premises bearing room no.17 on second floor of the H.V.Building at Samuel Street, Bombay 400003. The allegation in the plaint is that the original first defendant obtained premises as a tenant and inducted the 2 nd to 6 th defendants. The allegation is that 2 to 6 defendants who were unauthorised occupants of the suit premises and ythat the said defendants have converted the user of the said premises from residential to commercial. A Written statement was filed by the 2 nd to 5 th defendants. The contention is that the said defendants were protected tenants under the Bombay Rents, Hotel and Lodging House Rates(Control) Act, 1947 (hereinafter referred to as Bombay Rent Act). The trial court by Judgment and Decree dated 14 th November 2005 decreed the suit and the defendants were 3 directed to hand over the possession of the suit premises to the original plaintiffs. The trial court held that the 1 st defendant had unauthorisedly transferred the suit premises to the defendant nos.2 to 6. The trial court negatived the contention raised by the defendant nos.2 to 6 that they were protected tenants under the said Act of 1947. An appeal was preferred by the petitioners against the said decree. By the impugned order, the Appellate Bench on the basis of a report of an Architect observed that the market rent of the suit premises will be Rs.20,200/- per month. The Appellate Court also referred to the fact that the building was 100 years old. The Appellate Court also noted that 2 nd to 6 th defendants were using the suit premises for commercial purpose and after considering these aspects, as a condition for grant of stay, the appellants were directed to deposit a sum of Rs. 5,000/- per month. The appellants are the petitioners in this petition. 4 The learned counsel for the petitioners submitted that the amount of Rs.5,000/- per month fixed by the Appellate Court is arbitrary and excessive. He submitted that the petitioners have been regularly paying rent to the co-owner of the original plaintiff and the affidavit of the co-owner is already placed on 4 record of the trial court. He submitted that considering the fact that the building in which the suit premises is situated is 100 years old building, by no stretch of imagination the compensation of Rs.5000/- per month could have been fixed by the Appellate Court. He invited my attention to the affidavit of the co-owner which is on record of the trial court. He submitted that in view of the decision of the Apex Court in case of Niyas Ahmad Khan Vs. Mahmood Rahmat Ullah Khan [(2008 7 SCC 539], it is not permissible to fix the compensation amount in excess of the standard rent in respect of the premises. He submitted that in view of the said decision, the earlier decision of the Apex Court in the case of Atma Ram Properties (P) Ltd. Vs. M/s.Federal Motors Pvt.Ltd. [2005 (1) RCJ 23 (SC)] cannot be applied to the properties governed by the relevant rent control legislation. He submitted that the building is old and in fact a vacation notice has been already issued by the authorities. He submitted that no reasons have been assigned by the Appellate Court for arriving at the figure of Rs.5,000/- per month. He submitted that the opinion of the Architect in the valuation report could not have been taken as a gospel truth and exorbitant amount of Rs.5,000/- per month could not have been fixed. He submitted that the result of the impugned order is that the remedy 5 of appeal available under statute has been virtually withdrawn in so far as petitioners are concerned. He, therefore, submitted that the impugned order deserves to be quashed and set aside being perverse. 5 I have given careful consideration to the submissions. The Apex Court in the case of M/s.Atma Ram Properties (P) Ltd.(supra) has held thus : 19.To sum up, our conclusions are- (i)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 in so far 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 6 tenant contained in clause (1) of Section 2 of the Act, the 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 from 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. (Emphasis added) Now, it will be necessary to consider the case of Niyas Ahmad Khan Vs.Mahmood Rahmat Ullah Khan and another (supra). This was a case where the petition under the Rent Control legislation for 7 eviction filed by the landlord was dismissed by the trial court and the order of dismissal was confirmed by the Appellate Court. While admitting the writ petition filed by the landlord, interim direction was issued by the High Court to the respondent-tenant to deposit a sum of Rs.12,000/- per month. The Apex Court while upholding the challenge observed that this was a case where a request made by the landlord for passing the eviction order was turned down. The Apex Court observed that prayer in the writ petition was for quashing the order of authority of dismissal of the eviction petition and for granting an order of eviction. There was no prayer in the writ petition before the High Court for direction for payment of any rent or for payment of any increased rent. After observing this, the Apex Court proceeded to hold that as under : 6...When the grievance in the writ petition was only in regard to refusal of an order of eviction under section 21(1) (a) of the Act, there is no justification for directing payment of a higher rent either pending consideration of the writ petition or otherwise. In paragraph 9 of the said decision, the Apex Court made a distinction between the case where 8 the writ petition was filed for seeking stay to execution of decree of eviction and the case where a writ petition was filed by the landlord challenging the rejection of petition for eviction. In paragraph 9, the Apex Court has held thus : 9 We should however note the distinction between cases where a writ petition is filed by the tenant challenging the order of eviction and seeking stay of execution thereof, and cases where a writ petition is filed by the landlord challenging the rejection of a petition for eviction. What we have stated above is with reference to writ petitions filed by landlords. In writ petitions filed by tenants, while granting stay of execution of the order of eviction pending disposal of writ petition, the High Court has the discretion to impose reasonable conditions to safeguard the interests of the landlord. But even in such cases the High Court cannot obviously impose conditions which are ex facie arbitrary and oppressive thereby making the order of stay illusory. When a tenant files a writ petition challenging the order of eviction, the High Court may reject the 9 writ petition if it finds no merit in the case of the tenant; or in some cases, the High Court may admit the writ petition but refuse to grant stay of execution, in which event, the tenant may be evicted, but can claim restoration of possession if he ultimately succeeds in the writ petition; or in some cases, the High Court finding the case fit for admission, may grant stay of eviction, with or without conditions so that status quo is maintained till the matter is decided. Where the High Court chooses to impose any conditions in regard to stay, such conditions should not be unreasonable or oppressive or in terrorem. Adopting some arbitrary figure as prevailing market rent without any basis and directing the tenant to pay absurdly high rent would be considered oppressive and unreasonable even when such direction is issued as a condition for stay of eviction. The High Court should desist from doing so. (Emphasis added) Paragraph 10 of the said decision reads thus : 10.To sum up, in writ petitions by 10 landlords against rejection of eviction petitions, there is no scope for issue of any interim direction to the tenant to pay higher rent. But in writ petitions by tenants against grant of eviction, the High Court may, as a condition of stay, direct the tenant to pay higher rent during the pendency of the writ petition. This again is subject to two limitations. First, the condition should be reasonable. Second, there should not be any bar in the respective State rent control legislation in regard to such increases in rent. But that as it may. In the case of M/s. Atma Ram Properties (P) Ltd.(supra) the Appellate Court has considered the power of the Appellate Court to grant stay under Rule 5 of Order XLI of the Code of Civil Procedure,1908. The Apex Court held that the Appellate Court does have jurisdiction to put the appellant on such reasonable terms as would its opinion reasonably compensate the decree holder for loss occasioned by delay in execution of decree by grant of stay order, in the even of the said appeal being dismissed. The Apex Court observed that from the date of passing the decree of eviction, tenancy of the tenant stands terminated and with effect from that date the 11 tenant is liable to pay mesne profits or compensation for the 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 Apex Court specifically held that the landlord is not bound by the contractual rate of rent effective for the period starting from the date of decree. Therefore, there is no inconsistency between the decisions of the Apex Court in the case of Niyas Ahmed (supra) and Atma Ram Properties (supra). It is not possible to accept the submission that the law laid down in case of Atma Ram Properties (P) Ltd. (supra) the property has underwent a change in case of Niyas Ahmad Khan (supra). Even in case of Atma Ram Properties (P) Ltd (supra), the Apex Court has held that the terms on which stay can be granted should be reasonable. The amount of compensation can be made payable from the date of the decree for eviction and for a period prior to that, an amount which is more than the rent cannot be made payable. 6 The disputed premises is a room in a building situated at Samuel Street in the heart of the business district of city of Mumbai. The 1 st and 2 nd petitioners are private limited companies who are using the premises for 12 commercial use. The petitioners are not the tenants. The finding of the trial court is that the 6 th respondent is the tenant. The finding of the trial court is that the 6 th respondent has illegally or unlawfully transferred the suit premises in favour of the 1 st and the 2 nd petitioners. The Appellate Court has considered the valuation report of Government Approved Valuer. Perusal of the valuation report shows that the property is located near Masjid Railway Station and it is in the heart of the city of Mumbai. The valuation report has noted that the building is about 100 years old and therefore, the valuer has considered the depreciated value of the building. He has stated that the Maharashtra Housing and Area Development Authority Repair Board has repaired the building from time to time and it is maintained in a good condition. The valuation has been made by the valuer by assuming that the future life of the building will be 15 years. The valuer has recorded an opinion that the monthly compensation will have to be fixed at Rs.20,200/-. 7 As against the said opinion, the amount of compensation has been fixed by the Appellate Court at Rs.5,000/- per month. It is noted in the report of the valuer that the property is situated in the close proximity of Crawford 13 market, Fountain and Fort area as well as Masjid railway station. The carpet area of the suit premises is taken as 205 sq. ft. and the built up area as per the actual measurement is 245 sq. ft. The first and second petitioners are using the suit premises for commercial purposes. The said petitioners are private limited companies. Considering all these aspects, condition imposed by the Appellate Court of depositing a sum of Rs.5,000/- per month is certainly reasonable. It is obvious that the deposit of the amount by the petitioners is subject to final outcome of the appeal. In my view, taking into account the entire material on record, the condition imposed by the Appellate Court for grant of stay is certainly reasonable as contemplated by the Apex Court in case of Atma Ram (supra). No case for interference is made out. Petition is rejected. JUDGE