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Super Max International Pvt. Ltd. v/s State of Maharashtra & Another


    Decided On, 14 October 2008

    At, High Court of Judicature at Bombay


    Mr. P.K. Dhakephalkar i/b. M/s. S.K. Srivastav & Co. for the Applicants. Mr. G.S. Godbole i/b. Smt. G. P. Mulekar, Asstt. Government Pleader for the Respondents.

Judgment Text


This is the Respondent, landlord's Civil Application. The Civil Revision Application filed by the tenant, is to be heard finally. The Applicant/Respondent has succeeded in obtaining a decree for eviction in both the Courts below. The question is whether in the facts and circumstances of the case the Petitioner/tenant ought to be granted an unconditional stay of the execution of the decree for eviction or whether the execution of the decree ought to be stayed only upon certain conditions and, if so, on what conditions.

2.The property admittedly is situated in a prime locality in Mumbai and admeasures 9000 sq. ft. The Respondent has succeeded in both the courts below. Prima-facie, it is not possible to state that the judgments are unsustainable. The premises are occupied by the officers of the co-operative department of the State of Maharashtra. The District Deputy Registrar is Petitioner no.2. In my view, it would be unjust to grant an unconditional stay of the execution of the decree.

3.In Atma Ram Properties (P.) Ltd. v. Federal Motors Pvt. Ltd., 2005 (1) Supreme Court Cases 705, the Supreme Court held that while passing an order of stay the Appellate Court has jurisdiction to put the Applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for any loss occasioned by the delay in the execution of the decree by the grant of a stay order in the event of the appeal being dismissed. Indeed, it is also held that the terms should be reasonable. In paragraph 9, the Supreme Court held :-

"9. Dispossession, during the pendency of an appeal of a party in possession, is generally considered to be "substantial loss" to the party applying for stay of execution within the meaning of clause (a) of sub-rule (3) of Rule 5 of Order 41 of the Code. Clause (c) of the same provision mandates security for the due performance of the decree or order as may ultimately be passed being furnished by the applicant for stay as a condition precedent to the grant of order of stay. However, this is not the only condition which the appellate court can impose. The power to grant stay is discretionary and flows from the jurisdiction conferred on an appellate court which is equitable in nature. To secure an order of stay merely by preferring an appeal is not a statutory right conferred on the appellant. So also, an appellate court is not ordained to grant an order of stay merely because an appeal has been preferred and an application for an order of stay has been made. Therefore, an applicant for order of stay must do equity for seeking equity. Depending on the facts and circumstances of a given case, an appellate court, while passing an order of stay, may put the parties on such terms the enforcement whereof would satisfy the demand for justice of the party found successful at the end of the appeal."

"In South Eastern Coalfields Ltd. v. State of M.P.1 this Court while dealing with interim orders granted in favour of any party to litigation for the purpose of extending protection to it, effective during the pendency of the proceedings, has held that such interim orders, passed at an interim stage, stand reversed in the event of the final decision going against the party successful in securing interim orders in its favour; and the successful party at the end would be justified in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery to it of benefit earned by the opposite party under the interim order of the High Court, or (b) compensation for what it has lost, and to grant such relief is the inherent jurisdiction of the court. In our opinion, while granting an order of stay under Order 41 Rule 5 CPC, the appellate court does have jurisdiction to put the party seeking stay order on such terms as would reasonably compensate the party successful at the end of the appeal insofar as those proceedings are concerned. Thus, for example, though a decree for payment of money is not ordinarily stayed by the appellate court, yet, if it exercises its jurisdiction to grant stay in an exceptional case it may direct the appellant to make payment of the decretal amount with interest as a condition precedent to the grant of stay, though the decree under appeal does not make provision for payment of interest by the judgment-debtor to the decree-holder."

4.Mr. Godbole submitted that the judgment would have no application in the case of a tenant not carrying on business or any commercial activity but only activities for the benefit of the public or any charitable activity.

5.I do not agree.

Firstly, the judgment of the Supreme Court makes no such qualification. The fact that the tenant in that case happened to be carrying on commercial activities in the tenanted premises would make no difference. I do not read the ratio of the judgment as limiting its applicability to tenants carrying on business in the premises. Nor do I read the judgment as being inapplicable to tenants discharging public duties or carrying on activities for charitable purposes. There is nothing in the Act either that warrants such a qualification or exclusion. Parties cannot do charity at the expense of others. Nor is the State entitled to discharge its public functions and duties at the expense of the rights of a citizen except by due process of law.

6.Mr. Godbole relied upon the judgment of the Supreme Court in Niyas Ahmed Khan v. Mahmood Rahmat Ullah Khan & Anr., JT 2008 (7) 104.

7(A).The judgment does not support his submission. It is important to note that in that case the prescribed authority dismissed the Respondent's petition for eviction. That order was confirmed by the Appellate Authority by dismissing the Appeal filed by the Respondent. The Respondent challenged these orders by filing a Writ Petition in which there was no prayer for payment of any rent or for payment of any amount. The only prayer was for quashing the orders of the prescribed authority and the Appellate Authority and to grant an order of eviction. While admitting the Writ Petition, a learned single Judge of the Allahabad High Court issued an interim direction against the Respondent tenant to pay rent at the rate of Rs.12000/- per month with a further direction that if the rent is not paid for two consecutive months the landlord could evict the tenant with the aid of police. The facts of the present case are entirely different.

7(B).It is pertinent to note that in paragraph 8 the Supreme Court held that when the grievance in the Writ Petition was only in regard to the refusal of an order of eviction, there was no justification for directing payment. The present Civil Application expressly seeks an order for payment of compensation from the date of the decree at the rate of Rs.15,00,000/- per month.

7(C).It is also pertinent to note that in paragraph 8 the Supreme Court expressly noted the distinction between cases where the Writ Petition is filed by the tenant challenging the order of eviction and seeking a stay of execution and cases where the Writ Petition is filed by a landlord challenging the rejection of the petition. In the case before me the Civil Revision Application is filed by the tenant who has suffered a decree for eviction by both the courts. Having noted the distinction, the Supreme Court clarified that what was stated earlier in the judgment was with reference to Writ Petitions filed by the landlords.

7(D).Paragraphs 8 and 9 of the judgment read thus :-

"8. 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 say 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 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. High Court should desist from doing so."

"9. To sum up, in writ petitions by landlord 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 increase in rent. Be that as it may."

8.The judgment is therefore not only distinguishable but the observations in fact assist the Respondents in this case. I did not understand Mr. Dhakephalkar as even remotely suggesting that the condition may be imposed arbitrarily or that an unreasonable condition may be imposed. The requirement of the condition being reasonable, was recognised even in Atma Ram's case (supra).

9.Mr.Godbole submitted that the condition ought to be restricted to a rate of Rs.5 per sq. ft. as this is the rate charged by the State for letting premises to non-profit making bodies and charities.

10.The State may for various reasons fix a low rate for letting properties to non-profit making bodies and charities. That however would not entitle it to seek a similar facility from others. There is nothing in law which requires properties being let to the State for a meager amount merely because the State chooses to do so in respect of certain tenants/licensees.

11.This leaves for consideration the condition on which the stay to the execution of the decree ought to be granted. In paragraph 9 of Atma Ram's case (supra) the Supreme Court further held :-

"Robust common sense, common knowledge of human affairs and events gained by judicial experience and judicially noticeable facts, over and above the material available on record - all these provide useful inputs as relevant facts for exercise of discretion while passing an order and formulating the terms to put the parties on. After all, in the words of Chief Justice Chandrachud, speaking for the Constitution Bench in Olga Tellis v. Bombay Municipal Corpn. (1985 (3) SCC 545 at p.574, para 35)

"Common sense which is a cluster of life's experiences, is often more dependable than the rival facts presented by warring litigants."

12.Mr. Dhakephalkar submitted that the property would fetch about Rs.20,000/- per sq. ft. I do not suggest that he is at all wrong in this regard. He submitted further that the rate of return on a leave and licence basis ought to be 10% of the value. This may be a little high.

13.Mr. Godbole stated that Mr.Dhakephalkar's valuation was on the higher side. He submitted that the value would be about Rs.9000/- per sq. ft. Mr. Godbole submitted that the value of the property would be only around Rs.9,00,00,000/- and not Rs.18,00,00,000/- as submitted by Mr. Dhakephalkar.

14.The Stamp Duty Ready Reckoner publishes the rates for properties in various parts of Mumbai. In respect of similar properties situated in the same area, the value of the property is stated to be about Rs.12000/- per sq. ft. Normally, the rates mentioned in the ready reckoner are lower than the actual market rates. In any event, they are seldom higher than the actual market rate. A reasonable return on a leave and licence basis would be not less than 6% of the value of the property.

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r />15.I intend taking an extremely charitable view in the Petitioner's favour while deciding the condition subject to which the execution of the decree is to be stayed. I do so as the possibility of the Respondent recovering the amount determined finally is high considering that the tenant is the State. I will presume on the basis of the Ready Reckoner that the suit property would fetch a rate of Rs.12000/- per sq. ft. The value of the property which admeasures 9000 sq. ft. would thus be a minimum of Rs.10,80,00,000/-. Even assuming a rate of return of 6% per annum, it would fetch a sum of Rs.64,80,000/- per annum or Rs.5,40,000/- per month. Anything less would be illusory. 16.In the circumstances, the Civil Application is disposed of as follows :- i) The execution of the decree shall remain stayed subject to the Petitioners depositing on before the 10th day of each month, a sum of Rs.5,40,000/- from the date of the decree passed by the trial Court. ii) The payments shall commence from 10th January, 2009. The arrears shall be deposited on or before 10th January, 2009. iii) The amount is ad-hoc and shall be subject to further orders in these proceedings or in any other appropriate proceedings. iv) The office shall invest the said amounts, if deposited, in a Nationalised Bank initially for a period of one year and thereafter for the like periods of one year each.