A.H. Thalish v. S. Binu Raj

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.Q.BARKATH ALI WEDNESDAY, THE 8TH JUNE 2011 / 18TH JYAISHTA 1933 OP (RC).No. 1335 of 2011(O) -------------------------------------AGAINST THE ORDER DATED 28/03/2011 IN IA 1584/2011 IN RCA.28/2011 of PRL. DISTRICT COURT, ERNAKULAM .................... ## PETITIONER/RESPONDENT: A.H.THALISH, AGED 50 YEARS, S/O.A.M.HABEED, 24, SKYLINE ELYSIUM GARDENS, STADIUM LINK ROAD, KALOOR, KOCHI-17. BY ADV. SRI.SHAJI P.CHALY SRI.R.SANJITH SMT.LIJITTA G.MATHEW RESPONDENT/PETITIONER: S.BINU RAJ, AGED 35, S/O.O.N.SHANMUGHAN, SAIRAM, KALAPURACKAL, AYYAPPANKAVU, KOCHI-18. BY ADV. SRI.VARGHESE C.KURIAKOSE FOR R1 SRI.ARJUN S.RAJ FOR R1 THIS OP (RENT CONTROL) HAVING COME UP FOR ADMISSION ON 08/06/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: EXT. P1 TRUE COPIES OF THE APPEAL MEMORANDUM IN RCA 28/2011 ON THE FILE OF THE LEARNED RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM DISTRICT. EXT. P2 TRUE COPY OF THE STAY PETITION IA 1584/2011 IN RCA 28/2011 ON THE FILE OF LEARNED RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM DISTRICT. EXT. P3 TYPED COPY OF THE ORDER DT.28.3.2011 of the LEARNED RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM DISTRICT IN IA 1584/2011 IN RCA 28/2011 EXT. P4TRUE COPY OF THE CAVEAT FILED BY THE PETITIONER ON THE FILES OF THE LEARNED RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM DISTRICT. /TRUE COPY/ A.K.Basheer & P.Q.Barkath Ali, JJ. --------------------------------------------------- O.P.(RC)No.1335 of 2011 --------------------------------------------------- Dated this the 8[th] day of June, 2011 ## **JUDGMENT** ## **Basheer, J.** The landlord of a commercial building situated at Kaloor, within the limits of the Corporation of Kochi, has filed this original petition under Article 227 of the Constitution of India raising an interesting legal question. 2. Before we deal with the question, the relevant facts which gave rise to this litigation may be briefly noticed. 3. The respondent/tenant is in occupation of approximately 1800 sq.ft. in the building referred to above. The monthly rent that is being paid by the respondent/tenant to the landlord is `.23,000/-. Petitioner/ landlord initiated eviction proceedings against the respondent under Section 11(3) of the Kerala Buildings (Lease and Rent Control) Act before the Rent Control Court, Ernakulam contending that he needed the building for his own occupation to start a business. The Rent Control Court ordered eviction after considering the evidence adduced by the parties on both sides. OPRC 1335/2011 2 4. The above order of eviction was challenged by the respondent/tenant before the Rent Control Appellate Authority (District Judge), Ernakulam in R.C.A.No.28/2011. 5. It is on record that the petitioner appeared before the Appellate Authority on caveat and made a prayer not to grant unconditional stay of eviction of the tenant. Placing reliance on a decision of their Lordships of the Supreme Court in **State of Maharashtra and another v. Super Max International (P) Ltd. and others** ((2009) 9 SCC 772), petitioner urged the Appellate Authority to direct the tenant to pay/deposit `.50,000/- every month towards rent, keeping in view the prevailing rent of `.60-70/sq.ft. in that locality and the huge area that has been let out to the tenant. However, the learned District Judge passed a single line order, which reads thus: “Respondent appears. Interim stay granted.” 6. Petitioner, while impugning the said non speaking order, contends that the Appellate Authority ought to have at least considered the sustainability or otherwise of the prayer made by him to impose a reasonable condition while passing the interim order of stay. Sri.Shaji P.Chaly, learned counsel for th petitioner, submits that OPRC 1335/2011 3 the Apex Court has, in unambiguous terms, laid down the decision cited supra that it is open to the appellate or revisional authority to stay execution of the order of eviction on terms, which may include an appropriate direction to pay monthly rent at a rate higher than the contractual rate. Learned counsel further submits that the Appellate Court failed to take note of the fact that the above dictum laid down by the Apex Court is binding on all courts in the country under Article 141 of the Constitution of India. 7. However, Sri.Varghese Kuriakose, learned counsel for the respondent/tenant submits that the decision in **Super Max International** (supra) has not laid down any proposition of law making it mandatory or incumbent on all courts to impose conditions to grant stay of execution of the order of eviction. 8. The short question that arises for consideration is whether the appellate or revisional authority, as the case may be, can issue any direction to the tenant to deposit monthly rent at a rate higher than the contractual rate, without making any enquiry as provided under Section 5 of the Act. 9. Before we deal with the arguments advanced by the counsel on both sides, we may refer to the two decisions of the Apex Court on which heavy reliance has been placed by the learned counsel for the OPRC 1335/2011 4 ## petitioner. In **Atma Ram Properties (P) Ltd. v. Federal Motors (P)** **Ltd.** ((2005) 1 SCC 705), the two questions that were formulated for consideration before the Apex Court read thus: “i. In respect of premises enjoying the protection of rent control legislation, when does the tenancy terminate; and ii. Up to what point of time is the tenant liable to pay rent at the contractual rate and when does he become liable to pay compensation for use and occupation of the tenancy premises unbound by the contractual rate of rent to the land lord?” 10. The eviction proceedings in the above case arose under the Delhi Rent Control Act, 1958. The landlord alleged that the tenant had illegally sublet the premises without his consent. The Rent Control Court allowed eviction. On an appeal preferred by the tenant, the order of eviction was stayed subject to the condition that the tenant deposits `.15,000/- per month in addition to the contractual rate of rent that may be paid by him to the landlord directly. The above order was challenged by the tenant before the High Court of Delhi under Article 227 of the Constitution of India. A learned single Judge of the High Court, set aside the above conditional order passed by the Rent Control Court. The said order passed by the learned single Judge was OPRC 1335/2011 5 challenged by the landlord in appeal before the Apex Court. Their Lordships, while considering the two questions extracted supra, held that 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. However, the court cautioned that such terms shall be reasonable. While dealing with the issue of termination of tenancy, with particular reference to the provisions contained in the Delhi Rent Control Act, the court held that tenancy does not stand terminated merely by its termination under the general law and that it would terminate only with the passing of the decree for eviction. It was further held that 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 court emphasised that the landlord is not bound by the contractual rate of rent effective for the period preceding the date of the decree. 11. The issue that came up for consideration before the three Judge Bench of the Apex Court in **Super Max International** (supra **)** OPRC 1335/2011 6 was whether the condition imposed by the Appellate Authority under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 was reasonable. The small Cause Court passed an order of eviction in favour of the landlord on the ground of bona fide need. The appeal filed against the said order was dismissed by the appellate authority. The said order was challenged by the tenant before the Bombay High Court in a revision petition. On a motion for interim stay made by the tenant, the High Court passed an order imposing a condition that the tenant shall deposit `.5,40,000/- every month commencing from the date of the decree passed by the trial court. It was further directed that the rent in arrears shall also be deposited within a specified date and that the future deposits for every month should also be made by 10[th] of each succeeding month. However, it was made clear that the landlord would not be entitled to withdraw the amount in deposit and that the deposit made on an adhoc basis would be subject to further orders in the revision petition or in any other appropriate proceedings. 12. It may at once be noticed that the monthly rent payable by the tenant in respect of the said building was only `.5236.58 apart from water charges at the rate of `.515.35 per month. OPRC 1335/2011 7 13. Their Lordships, after a survey of a large number of decisions arising under the Rent Control Legislations in various States in the country and also the decision in **Atma Ram** (supra), held thus: “In the light of the discussions made above, we hold that in an appeal or revision preferred by a tenant against an order or decree of an eviction passed under the Rent Act it is open to the appellate or the Revisional Court to stay the execution of the order or the decree on terms, including a direction to pay monthly rent at a rate higher than the contractual rent. Needless to say that in fixing the amount subject to payment of which the execution of the order/decree is stayed, the Court would exercise restraint and would not fix any excessive, fanciful or punitive amount.” 14. It is contended by Sri.Varghese Kuriakose, learned counsel for the respondent/tenant that the contentions raised by the petitioner, relying on the above decision of the Apex Court, is totally misconceived and untenable. According to the learned counsel, the directions issued by the Apex Court in the two decisions cited supra are not general in nature to be followed by all the courts in the country in all cases. As is evident from the judgments, the Apex Court had issued those directions only in the peculiar facts and circumstances of those cases. He further submits that it will be hazardous, if the appellate authorities under the Act are given such OPRC 1335/2011 8 wide power to direct the tenant to deposit rent at an enhanced rate, albeit provisionally and subject to the final out come of the cases. He submits that such orders will undermine the provisions contained in Section 5 of the Act which deals with fixation of fair rent after due enquiry. Still further, it may lead to multiplicity of litigations resulting in untold hardship and procrastination not only to the tenants but to the landlords as well. It is also contended by the learned counsel that the provisions in the Kerala Act are totally different from those contained in the Delhi and Bombay Acts. In the two decisions referred to above, the Apex Court had only held that the appellate authorities in appropriate cases could exercise the discretionary power vested in a Civil Court under Rule 5 of Order XLI of the Code. 15. According to the respondent, the definition of the tenant in th two enactments is also at variance from the definition clause contained in the Kerala Act. The other contention raised by the learned counsel is that under Section 18(2) of the Act, the appellate Authority is vested with the power to grant stay of execution of the order of eviction pending decision on the appeal. He points out that such a provision is conspicuously absent in the Delhi and Bombay enactments and it is, therefore, that the aid of Order XLI Rule 5 had to be imported in the above two cases. OPRC 1335/2011 9 16. However, it is pointed out by the learned counsel for the petitioner that Section 18(2) of the Act enables the appellate authority to stay the execution of the order of eviction on appropriate terms and conditions. The said power is discretionary as is the power vested in a civil court under Rule 5 of Order XLI of the Code. He further submits that the provisions of the Code will be applicable mutatis mutandis to the proceedings under Act 2 of 1965 as enumerated in Section 23. 17. It is true that the definition of 'tenant' in the Kerala Act is slightly different from the definitions available in the Delhi and Bombay Enactments. Going by the definition in the Kerala Act, 'tenant' means any person by whom or on whose account rent is payable for a building and includes the heir or heirs of a deceased tenant and also a person continuing in possession after the termination of the tenancy in his favour ( emphasis supplied by us). It is not necessary to refer to the latter part of the definition contained in Section 2(6) of the Act. 18. Under the Bombay Act, “tenant” is any person by whom or on whose account rent is payable for any premises and includes such sub-tenants and other persons as have derived title under a tenant before the 1[st] day of February 1973 and also any person remaining, after the determination of the lease, in possession, with or without the OPRC 1335/2011 10 assent of the landlord of the premises leased to such person or his predecessor who has derived title before the first day of February, 1973. 19. “Tenant” under the Delhi Act means any person by whom or on whose account or behalf the rent of any premises is, or, but for a special contract, would be, payable, and includes a sub-tenant, or any person continuing in possession after the termination of his tenancy etc., but does not include any person against whom order or decree for eviction has been made ( Section 2 (l)(A). (emphasis supplied by us) 20. Learned counsel for the respondent/tenant, while trying to highlight the slight difference in the three definition clauses referred to above, submits that under the Kerala Act, a tenant can continue in possession as a statutory tenant even after termination of the tenancy in his favour, whereas under the Delhi and Bombay enactments, especially under the former, tenants are not treated as statutory tenants. As has been noticed already, under the Delhi Act, tenant does not include “any person against whom order or decree for eviction has been made”. It is contended by the learned counsel that the definition clause of 'tenant' under the Bombay Act is also different from the definition clause contained in the Kerala Act. OPRC 1335/2011 11 21. The attempt of the learned counsel appears to be to drive home the point that the two decisions cited supra are not liable to be treated as binding precedents in all cases arising under the Rent Control legislation all over the country. We do not propose to delve deeper into the above aspect of the issue at this stage for the obvious reason that the Apex Court has not issued any direction as such to the Appellate or Revisional Authorities in the country in general terms. 22. More importantly, learned counsel for the petitioner also does not have a case that the Appellate Authorities in all cases should issue directions imposing a condition to pay rent at enhanced rates. The limited prayer of the petitioner is that the Appellate Authority in this particular case ought to have at least considered the question whether there was any warrant for imposing a reasonable condition for grant of stay. It is in this context that the learned counsel has pointed out the prevailing rent in that area, which, according to the petitioner, is around `.60-70/sq.ft. The tenant has been keeping in his possession about 1800 sq.ft on a monthly rent of `.23,000/-. Going by the present rate of rent prevalent in that area, the monthly rent payable by him would be quite huge, it is contended by the learned counsel. OPRC 1335/2011 12 23. There is considerable force in the contention raised by the learned counsel that the Appellate Authority ought to have given an opportunity to the petitioner to produce necessary materials which would prima facie substantiate his contention. 24. In this context, learned counsel has invited our attention to the Fair Value Register prepared by the Government of Kerala under the Stamp Act. He further submits that the petitioner would have been in a position to produce other relevant materials in support of his case, if only the Appellate Authority had given him an opportunity. Learned counsel points out that the petitioner had lodged a caveat before the Appellate Authority solely for this purpose. The grievance of the petitioner is that the appeal may lie pending before the Appellate Authority for not less than 2-3 years, if not more. Petitioner is bound to suffer huge loss, if he is constrained to accept rent at such a reduced rate. Still further, the litigation may not end at the appellate stage, because, the tenant, if he loses in appeal, would be entitled to invoke the revisional power as provided under Section 20 of the Act. This may cause further procrastination. 25. But, according to learned counsel for the respondent, the apprehended delay in attaining finality for a litigation can be no ground to circumvent the provisions contained in a Statute. He OPRC 1335/2011 13 submits that, unlike in the Delhi and Bombay enactments, the Kerala Act provides that the Appellate Authority may stay the operation of the order of eviction pending the appeal (Section 18(2)). Such a power is not vested with the Appellate Authorities under the Delhi and Bombay enactments. It is thus contended by the learned counsel that, if the legislature intended to curtail the power of the appellate authority, it would have been explicitly provided in the Act itself. In this context, he points out that in Section 20 of the Act, the revisional court is not explicitly given the power to stay the operation of the order of eviction. But still, the High Court, while exercising the revisional power, passes interim orders of stay in appropriate cases. According to the learned counsel, in such situations, the revisional court may be well within its powers to impose appropriate conditions, while granting stay of execution of the order of eviction. The contention of the learned counsel is that the Appellate Authority under no circumstances, particularly in the absence of any explicit provision contained under Section 18(2) can impose any condition while passing orders of interim stay. 26. There is considerable force in the above contention. We are also not oblivious of the pitfalls that may develop if a general direction is issued to the appellate authorities to pass conditional orders of stay OPRC 1335/2011 14 in all cases, by fixing fanciful rent, albeit provisionally, in an arbitrary manner. It is true that appellate authorities under the Act are manned by Senior District Judges. There is no reason to believe that the power of discretion will be misused by these senior Judicial Officers. But still, there is a distinct possibility of proliferation of legal proceedings resulting from such interlocutory orders. We do not intend to elaborate. But, we may reiterate that the best possible solution may be expeditious disposal of the main case itself. 27. We have carefully considered the arguments advanced by learned counsel on both sides. Undoubtedly, any order passed by the Apex Court is binding on all Subordinate Courts in the country under Article 141 of the Constitution of India. Therefore, it will be idle for the respondent to contend for the position that the law laid down by the Apex Court in the two decisions cited supra, need not be considered by the Appellate Authorities, while exercising its discretionary power under Section 18( 2) of the Act. In this context, it may be noticed that the Apex Court in **Atma Ram** ( supra) has summed up its conclusion as hereunder : “(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 OPRC 1335/2011 15 in its opinion reasonably compensate the decreeholder 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 (l) 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 later date.” 28. In **Super Max International** (supra), the Apex Court after holding that “In an appeal or revision preferred by a tenant against an order or decree of an eviction passed under the Rent Act it is open to the appellate or the Revisional Court to stay the execution of the order or the decree on terms, including a direction to pay monthly rent at a rate higher than the contractual rent” issued a OPRC 1335/2011 16 cautionary note in the following lines : “ Needless to say that in fixing the amount subject to payment of which the execution of the order/decree is stayed, the court would exercise restraint and would not fix any excessive, fanciful or punitive amount.” 29. The court further elucidated thus : “Before concluding the decision one more question needs to be addressed: what would be the position if the tenant's appeal/revision is allowed and the eviction decree is set aside ? In that event, naturally, the status quo ante would be restored and the tenant would be entitled to get back all the amounts that he was made to pay in excess of the contractual rent. That being the position, the amount fixed by the court over and above the contractual monthly rent, ordinarily, should not be directed to be paid to the landlord during the pendency of the appeal/revision. The deposited amount, along with the accrued interest, should only be paid after the final disposal to either side depending upon the result of the case.” 30. Keeping in view the peculiar facts and circumstances of the case on hand and also the two decisions of the Apex Court referred to above, we are satisfied that the petitioner is entitled to get a further opportunity before the Appellate Authority to ventilate his grievance. OPRC 1335/2011 17 31. The Appellate Authority shall hear the petitioner and respondent and consider the question whether any appropriate condition is to be imposed on the tenant so that the rights of the petitioner to get reasonable rent during the pendency of the appeal is not put in jeopardy. We hasten to add that we have not expressed any opinion on the merit or demerit of the contentions raised by the parties. The Appellate Authority shall take a decision in the matter keeping in view the principles laid down by the Apex Court in **Atma Ram** and **Super Max International** (supra). The Appellate Authority may also consider the request made by the petitioner for an expeditious disposal of the appeal in the alternative. The original petition is disposed of in the above terms. (A.K.Basheer, Judge) (P.Q.Barkath Ali, Judge) tkv/sv/jes