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citation codes
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
  • Order 20 Rule 12 of the Code of Civil Procedure
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • Section 5, Subsection 2 of the 1983 Income Tax Act
  • Order 20 Rule 12 of the Code of Civil Procedure
Smart Summary

Factual and Procedural Background

An eviction decree dated 30-7-2002 was passed against the appellant–tenant in favour of the respondent–landlords with respect to non-residential premises (Shops Nos. 5 and 6, Bada Manzil, Bibijan Street, 67/69, Mohammed Ali Road, Mumbai). The appellant challenged that decree in Civil Appeal No. 7478 of 2004 before the Supreme Court of India. Execution of the decree was stayed, subject to the appellant paying an interim amount to the respondents. The present order is passed while the appeal is pending and deals solely with (i) withdrawal of an earlier connected appeal (C.A. No. 8017 of 2002) and (ii) fixation of the interim rate of mesne profits payable during the pendency of the eviction appeal.

Legal Issues Presented

  1. What provisional rate of mesne profits should the Court fix as a condition for continuing the stay of execution of the eviction decree?

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd., (2005) 1 SCC 705 Guidelines on determining mesne profits/rent during the pendency of an appeal where execution of an eviction decree is stayed. The Court relied on this decision to justify fixing a market-based interim rent rather than continuing the historical contractual rent of Rs 2.11 per sq ft.

Court's Reasoning and Analysis

The Court considered affidavits, site plans, and photographs submitted by both parties to arrive at a tentative view of (i) the area under occupation and (ii) prevailing market rates for comparable premises. For the limited purpose of this interim order, it treated the tenanted area as 625.25 sq ft on the ground floor and 113 sq ft on a mezzanine floor.

Applying the principles in Atma Ram Properties, the Court held that a tenant who benefits from a stay of an eviction decree should compensate the landlord at a rate approximating current market rent. It therefore fixed:

  • Ground floor: Rs 65 per sq ft per month
  • Mezzanine floor: Rs 22 per sq ft per month

Specific directions were issued for the timing and manner of deposits, including permission for the respondents to pursue separate proceedings under Order XX Rule 12 of the Code of Civil Procedure for final determination of mesne profits. The Court also declared its findings on area and rate to be purely tentative and without prejudice to the merits of the pending appeal.

Holding and Implications

IA No. 3 in C.A. No. 8017 of 2002 is allowed and that appeal is dismissed as withdrawn.

In C.A. No. 7478 of 2004, the stay of the eviction decree will continue only if the appellant complies with the interim mesne profit schedule fixed by the Court.

Failure by the appellant to abide by these monetary conditions will automatically vacate the stay, enabling the respondents to execute the eviction decree. Conversely, non-compliance by the respondents with their undertaking to refund or adjust amounts, if ultimately ordered, will disentitle them to receive the interim payments. The order has immediate financial implications for the parties but sets no new legal precedent beyond applying the principles laid down in Atma Ram Properties.

    Crompton Greaves Ltd. v. State Of Maharashtra .

    Order

    IA No. 3 in CA No. 8017 of 2002

    1. The application is allowed and the appeal dismissed as withdrawn in terms of the signed order.

    CA No. 7478 of 2004 (Prayer for interim relief)

    2. A decree for eviction passed against the appellant in favour of the respondents, in a suit based on landlord-tenant relationship is under appeal and the execution of the decree has been directed to remain stayed by this Court. The matter is listed for directions for appointing interim rate of mesne profits which the appellant should pay to the respondents as a condition for the operation of the stay.

    3. Both the parties have filed material supported by affidavits to enable the Court to form a tentative opinion on the quantum of mesne profits. Site plans and photographs showing the location of the property have also been filed. The rate of rent at which the appellant has been enjoying the property in terms of the lease was Rs 2.11p per sq ft since 1968. The tenanted premises are non-residential bearing Shops Nos. 5 and 6, Bada Manzil, Bibijan Street, 67/69, Mohammed Ali Road, Mumbai. There is some dispute about the exact measurement of the area of the premises in occupation of the appellant tenant. However, for the purpose of this order, we would take the measurement of the premises at 625.25 sq ft on the ground floor and 113 sq ft for the loft/mezzanine floor. After hearing the learned counsel for the parties and taking into consideration the rates of rent at which the adjoining properties are being held by the tenants from the respective landlords and keeping in view the decision of this Court in Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. (2005) 1 SCC 705, (2004) 10 Scale 345, it is hereby directed as under:

    (1) With effect from 30-7-2002, the date of the decree passed by the High Court, the appellant shall be liable to pay or deposit for payment to the respondent landlords, an amount calculated @ Rs 65 per sq ft for the area on the ground floor and Rs 22 per sq ft for the area on the mezzanine floor.
    (2) The first such deposit consisting of the amount calculated from the date of the decree up to 30-4-2005 shall be made on or before 31-8-2005. The appellant may adjust, by way of deduction, the amount, if any, paid by them to the respondents for this period.
    (3) With effect from 1-5-2005, the appellant shall continue to pay or deposit for payment to the respondent landlords, an amount calculated at the same rate month by month and by the 15th day of that month.
    (4) The respondents are permitted to move or pursue, if already filed, the application under Order 20 Rule 12 of the Code of Civil Procedure or to pursue such other remedy as may be available to them under the law for determination and recovery of the mesne profits which they would be entitled to recover from the appellant for the period between the date of institution of suit till the date of recovery of possession in the event of the present appeal being dismissed.
    (5) The respondents shall file an undertaking on affidavit, making a statement that the amount recovered by the respondents in terms of this order shall be refunded or remain available for adjustment in terms of any directions which this Court may make at the end. If any amount becomes liable to be refunded consistently with the decision of this Court in the appeal, the respondents shall refund the same, within the time appointed by the Court for the purpose and the amount shall remain a charge on the suit property.
    (6) Non-compliance with any of the terms stated in paras (1) to (3) above shall result in the order of stay passed by this Court being vacated and the respondents shall be free to execute the decree and recover possession from the appellant. Similarly, non-compliance by the respondents with condition (5) stated hereinabove would disentitle them to receive the amount and the amount liable to be paid by the appellant under this order shall be deposited in the Court and invested in fixed deposit from time to time.

    4. We make it clear that the area of the premises treated as in occupation of the appellant as also the amount quantified by this Court in this order are only tentative opinions formed by the Court on the basis of the material made available by the parties and is neither a determination of the actual area in occupation of the appellant nor of the amount for which the appellant may be held liable for payment to the respondents in duly constituted proceeding for the purpose nor is this order intended to be a reflection on the merits of the case of either party.

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    Crompton Greaves Ltd. v. State Of Maharashtra .
    (Apr 26, 2005)