RFA Nos. 457 and 458 of 2011. Case: M.C. Agrawal Huf Vs Sahara India and Ors.. High Court of Delhi (India)
| Case Number | RFA Nos. 457 and 458 of 2011 |
| Counsel | For Appellant: P.K. Aggarwal, Mercy Hussain, Advs. in RFA No. 458 of 2011, Vivek Kohli and Abhishek Swaroop, Advs. in RFA No. 457 of 2011 and For Respondents/: Vivek Kohli, Abhishek Swaroop, Advs. in RFA No. 458 of 2011, P.K. Aggarwal and Mercy Hussain, Advs. in RFA No. 457 of 2011 |
| Judges | Valmiki J. Mehta, J. |
| Issue | Contract Act, 1872 - Section 74; Delhi Rent Control Act, 1958; Transfer of Property Act, 1882 - Section 107; Registration Act, 1908 - Section 17(1); Evidence Act, 1872 - Sections 57 and 114; Civil Procedure Code (CPC), 1908 - Section 2(12) |
| Judgement Date | September 02, 2011 |
| Court | High Court of Delhi (India) |
Judgment:
Valmiki J. Mehta, J.
-
These are two cross appeals, one filed by the landlord (RFA No. 458/2011) and the other filed by tenants (RFA No. 457/2011) against the impugned judgment and decree of the trial Court dated 16.5.2011 whereby the suit of the landlord for possession and mesne profits with respect to the premises being a flat bearing No. 817A, 8th Floor, Ambadeep Building No. 24, Kasturba Gandhi Marg, New Delhi, was decreed. The grievance of the landlord is with respect to denial of claim by the trial Court with respect to executive class tickets in addition to the mesne profits, whereas the grievance of the tenants is with respect to awarding mesne profits at double the market rent without any evidence being led by the landlord and which decree is argued to be violative of Section 74 of the Contract Act, 1872. The tenants also question the grant of the high rate of interest at 20%. A minor issue with regard to liability towards the mesne profits is also raised that the same are payable only till 31.12.2004 and not 3.4.2005 as granted by the trial Court. I may finally add that the landlord has argued that the liability for mesne profits continues till date because the entire possession of the tenanted premises has not been given. The main argument as advanced by the landlord, who appeared in person, and who was karta of the landlord HUF however was that since as per the lease deed the tenants were in addition to the payment of rent liable to give a certain number of executive class air tickets, it was argued that the value of these air tickets have to be included in the mesne profits to be awarded. Assistance is sought in this behalf by the landlord of the order of the Supreme Court dated 28.4.2008 and which is an order which had allowed an amendment application filed by the landlord with respect to claim of mesne profits to include the claim towards the executive class air tickets.
-
The fact that there is a relationship of landlord and tenant is not disputed. It is also admitted that premises are outside the protection of Delhi Rent Control Act, 1958 and the tenancy was terminated by a legal notice. The tenants have also in the meanwhile delivered possession of the suit premises by depositing the keys in the Court on 3.4.2005. The main issue which is therefore required to be adjudicated is as to what should be rate of mesne profits which should be allowed to the landlord till 3.4.2005 when the keys of the property were deposited in the Court alongwith the issue as to whether the tenants continue to be liable to pay the mesne profits as the landlord alleges that the complete possession of the property has not yet been given.
-
On the aspect of the date till which mesne profits are payable, there is no doubt that mesne profits will be payable till the keys were deposited by the tenants in the Court on 3.4.2005 inasmuch as there are admissions noted in the impugned judgment that the tenants had removed the walls of the tenanted premises and the original position of the tenanted premises was restored only on 31.12.2004 and whereafter on 3.4.2005 the possession was handed over by depositing the keys in the Court on 3.4.2005. Learned Counsel for the tenants had only weakly disputed the payment of mesne profits from 31.12.2004 till 3.4.2005 and has not disputed the liability to pay mesne profits till 31.12.2004. I therefore hold that mesne profits shall be payable till 3.4.2005.
-
The entitlement of a landlord to claim mesne profits from a tenant who is in illegal possession of the premises after the tenancy is terminated, is governed by Section 2 (12) of Code of Civil Procedure, 1908 (Code of Civil Procedure) and which defies mesne profits as under:
The above provision has been interpreted in various judgments that ordinarily the mesne profits which a landlord is entitled against a tenant who continues to stay in the tenanted premises after the termination of the tenancy is the amount which the premises can fetch if let out on rent during the period of its illegal occupation by the tenant.
-
A clause in a lease deed that if a tenant stays in the premises after the expiry of the lease period or termination of the tenancy, then, the penalty/damages at double the market rate are payable would be ex facie violative of provision of Section 74 of the Contract Act, 1872 being a clause interrorem. Right from the Constitution Bench decision of the Supreme Court in the case of Fateh Chand v. Balkishan Das AIR 1963 sc 1405 it has been held that where on account of breach of contract damages can be proved, then, there cannot be any validity of a clause which gives liquidated damages. What is the rent which the premises can fetch during the period of the illegal occupation by the erstwhile tenant is a fact which can be easily proved in a suit for possession and mesne profits against the tenants by leading evidence with respect to rents of similar premises within the locality. The Court, on considering such evidence, with respect to rent of similar premises thereafter awards mesne profits to the landlord. It is only in cases where the damages/mesne profits cannot be proved in a Court of law, and one of which contract was the subject matter of the decision of the Supreme Court in the case of O.N.G.C. v. Saw Pipes Ltd. 2003 (5) SCC 705, then, in such cases liquidated damages as fixed by the contract would become payable. The Supreme Court in the case of O.N.G.C. (supra) has referred to a classic case of delays in construction of a road being built and the consequent loss being caused on account of non collection of toll. Since it is nearly impossible to calculate the loss on account of breach of contract because the number of users of the road and hence what would be the toll tax that could not have been collected cannot be calculated consequently in such circumstances, the clause with respect to liquidated damages becomes applicable and reasonable damages not exceeding the figure of liquidated damages are awarded. However, in cases where a landlord sues an erstwhile tenant for mesne profits this would not be the position because mesne profits can surely be calculated being the rent which will be payable with respect to the premises during the period of illegal occupation by the erstwhile tenant and which is a modality applicable by virtue of the language of Section 2(12) Code of Civil Procedure. I have had an occasion to recently consider this aspect of the ratio of the decisions of the Supreme Court under Section 74 of the Contract Act in the case of Dilip Kumar Bhargava v. Urmila Devi Sharma and Ors. in RFA No. 129/2011 decided on 31.3.2011 and paras 3 to 7 of this judgment dealing with this issue read as under:
-
Learned Counsel for the Appellant relies upon the Constitution Bench decision of the Supreme Court in the case of Fateh Chand v. Balkishan Dass (1964) 1 SCR 515: AIR 1963 SC 1405 and more particularly its paras 8,10,15 and 16 which read as under:
8. The claim made by the Plaintiff to forfeit the amount of Rs 24,000 may be adjusted in the light of Section 74 of the Indian Contract Act, which in its material part provides:
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from...
To continue reading
Request your trial