CHAPTER 7

Premises: Exemption from Applicability of Rent Control Legislation

It is pertinent to note here that the above noted proviso to clause (b) was inserted in the year 1963, with retrospective effect. Similarly, clauses (c) and (d) were incorporated in the year 1988, with a view to encourage the landlord for the supply of accommodation on rent to meet the rising demands of houses in metropolitan cities. It is further worth while to mention at this juncture that in the Delhi Rent Control Act, 1995, enacted by the Parliament, which is yet to come into force, the aforesaid exemption of the premises from the applicability of the Act was further extended. In this regard, are reproduced as the statement of objects and reasons mentioned below:-

"1. The relations between landlords and tenants in the National Capital Territory of Delhi are presently governed by the Delhi Rent Control Act, 1958. This Act came into force on the 9th February, 1959. It was amended thereafter in 1960, 1963, 1976, 1984 and 1988. The amendments made in 1988 were based on the recommendations of the 'Economic Administration Reforms Commission and the National Commission on Urbanisation. Although they were quite extensive in nature, it was felt that they did not go far enough in the matter of removal of disincentives to the growth of rental housing and left many questions unanswered and problems unaddressed. Numerous representations for further amendments to the Act were received from groups of tenant and landlord and others.

2. The demand for further amendments to the Delhi Rent Control Act, 1958 received fresh impetus with the tabling of the National Housing Policy in both Houses of Parliament in 1992. The policy has since been considered and adopted by Parliament. One of its major concerns is to remove legal impediments to the growth of housing in general and rental housing in particular Paragraph 4.6.2 of the National Housing Policy specifically provides for the stimulation of investment in rental housing especially for the lower and middle income groups by suitable amendments to rent control laws by State Government. The Supreme Court of India has also suggested changes in rent control laws. In its judgment in the case of Prabhakaran Nair v. State of Tamil Nadu, MANU/SC/0796/1987: AIR 1987 SC 2117: (1987) 4 SCC 238 the court observed that the laws of landlords and tenants must be made rational, humane, certain and capable of being quickly implemented. In this context, a Model Rent Control Legislation was formulated by the Central Government and sent to the States to enable them to carry out necessary amendments to the prevailing rent control laws. Moreover, the Constitution (Seventy-fifth Amendment) Act, 1994 was passed to enable the State Governments to set up State level rent tribunals for speedy disposal of rent cases by excluding the jurisdiction of all courts except the Supreme Court.

3. In the light of the representations and developments referred to above, it has been decided to amend the rent control law prevailing in Delhi. As the amendments are extensive and substantial in nature, instead of making changes in the Delhi Rent Control Act, 1958, it is proposed to repeal and replace the said Act by enacting a fresh legislation.

4. To achieve the above purposes, the present Bill, inter-alia, seeks to provide for the following, namely:-

(a)exemption of certain categories of premises and tenancies from the purview of the proposed legislation;

(b)creation of tenancy compulsorily to be by written agreement;

(c)compulsory registration of all written agreements of tenancies except certain circumstances;

(d)limit the inheritability of tenancies;

(e)redefine the concept of rent payable and provide for its determination, enhancement and revision;

(f)ensure adequate maintenance and repairs of tenanted premises and facilitate further improvement and additions and alterations of such premises;

(g)balance the interests of landlords and tenants in the matter of eviction in specified circumstances;

(h)provide for limited period of tenancy and automatic eviction of tenants upon expiry of such tenancy;

(i)provide for the fixing and revision of fair rate and recovery of possession in respect of hotels and lodging houses;

(j)provide for a simpler and speedier system of disposal of rent cases through Rent Authorities and Rent Tribunal and by barring the jurisdiction of all courts except the Supreme Court; and

(k)enhance the penalties for infringement of the provisions of the legislation by landlords and tenants.

5. On enactment, the Bill will minimize distortion in the rental housing market and encourage the supply of rental housing both from the existing housing stock and from new housing stock."

Thus, we find that certain more categories of premises and tenancies are sought to be exempted by the proposed legislation. However, due to lot of protest from a particular section of the society the said legislation has failed to see the light of the day.

CASE LAW

1. Sangat Singh v. Ch. Perma Nand Bahl, MANU/SC/0455/1969: AIR 1970 SC 812

Facts of the case: For many years before 1955, the appellant was a tenant of the Government in respect of a part of a building which was originally evacuee property. The property was treated as part of the compensation pool and was put up for auction on December 7, 1955. A bid offered by respondents 1, 2 and 3 in this appeal was accepted by the Government, but no certificate was immediately issued. The Managing Officer addressed a letter to respondents 1, 2 and 3 on December 8, 1956 informing them that "provisional possession" was "decided to be given of the property subject to terms and conditions stipulated in the Indemnity Bond and the special affidavit executed by them." One of the conditions was that the respondents were entitled to realise rent from the tenants who were directed to attorn to respondents 1-3 with effect from December, 1956. Pursuant to this direction the respondents collected the rent from the appellant from and after December 4, 1956.

The Delhi Rent Control Act (59 of 1958) was brought into force with effect from some time in the year 1958. The first respondent served on the 21st February, 1964 a notice on the appellant determining the tenancy and requiring the appellant to deliver possession of the premises in his occupation. He thereafter instituted on August 7, 1964 a suit in the Civil Court at Delhi for an order of ejectment. The suit was resisted by the appellant contending inter alia that under the provisions of the Delhi Rent Control Act, 1958 the suit was not maintainable in the Civil Court and that in any event the notice served upon the appellant did not operate to terminate the tenancy. These contentions were rejected by the trial Court and a decree of ejectment was passed. The decree was confirmed in appeal to the District Court and in Second Appeal (to the High Court). By special leave the appellant has appealed to Supreme Court.

Findings of the Court: Court observed that:

"In any event the case is clearly governed by the proviso to section 3. This Court has in interpreting the proviso to section 3 observed in Civil Appeal No. 546 of 1966 (SC) and the companion appeals.

'Even if it were assumed that the premises belonged to Government it would have to be held in the circumstances of the case, that it was lawfully let by the respondent to the appellants inasmuch as the Managing Officer's giving "provisional possession of the property to the respondent" would really mean delivering symbolical possession of the property to him with the result that a direction on the appellants to pay rent to him would in effect amount to a direction to attorn to him. We are not impressed by the argument that 'letting' within the meaning of the proviso can only apply to a voluntary act on the part of the landlord allowing the former tenant to continue in possession. Acting in pursuance of the direction of the managing officer after the property had been auctioned to the respondent would in law amount to a letting by the respondent to the persons who were tenants under the custodian before.'

The facts which gave rise to Shiv Nath's case, Civil Appeals Nos. 546 of 1966 and 331 to 334 of 1967, dated 25-4-1969 (SC) appear to be identical with the facts of the present case. The provisional possession had been given by the Managing Officer authorising the respondents to recover the rent and the tenants were directed to attorn to them. There is no dispute that the appellant did attorn to the respondents and according to the decision of this Court in Shiv Nath's case, Civil Appeals Nos. 546 of 1966 and 331 to 334 of 1967, dated 25-4-1969 (SC), a direction of the Managing Officer after an auction sale, to the tenant to attorn to the purchaser and receipt of the rent by the purchaser constitute letting within the meaning of the proviso to section 3. In either view of the case the suit was not maintainable in the civil court."

Hence the appeal was allowed and plaintiff's suit was dismissed with costs.

2. Arjan Dass v. Babu Lal, RCJ 1971, pg. 973

Facts of the case: The property in dispute belonged to the Custodian and it is alleged that the respondent was an allottee of the same under the Custodian on a rent of Rs. 10 per month and subsequently on 13th December, 1956, the property was sold by public auction to the appellant who was given provisional possession of the same on 17th September, 1957. The certificate of sale was not issued on the said date but it appears to have been issued some time later.

However, on 17th September, 1957, the respondent executed a rent note in favour of the appellant in respect of the tenanted premises and agreed to pay Rs. 40 per month as rent. Thereafter on 20th August, 1964, the respondent-tenant filed a petition for fixation of standard rent under section 6 and 9 of the Act.

The appellant contested the petition on the ground that the application was barred by time prescribed by section 12 of the Act. The appellant landlord failed in his contention before the Additional Controller who held that the application was within time and the appeal against the same also failed. The Rent Control Tribunal has come to the conclusion that the application was within time on the ground that although the rent note had been executed on 17th September, 1957, the property at that time vested in the Government and as such was exempt from the operation of all the provisions of the Act in view of section 3 of the Act as it stood in the original Act before its amendment.

Findings of the Court: The Supreme Court after considering the aforesaid Amendment Act and the case law on the subject observed as under:

"Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the legal fiction about the retrospective operation of the Amendment Act. If as a result of the said fiction, we must read the subsequently inserted proviso as forming part of section 18A(5) of the Principal Act as from 1st April, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record.

My conclusion, therefore, is that the effect of the insertion of the proviso to section 3 of the Rent Act by the amendment Act is to carve out an exception to section 3 of the Act with effect from the date the principal Act came into force and as such section 12 of the Act would be deemed to apply to this case from the initial commencement of the Act and it is not permissible to discover another starting point of limitation than the one prescribed by section 12. Section 12 of the Act is categorical and there is no warrant for holding that any other period of limitation is intended to be prescribed for the situation such as the one we are faced within this case. This provisions has been enacted to restrict the rights of the parties flowing from a contract arrived at with free consent and as such, it must be strictly construed and the right must be exercised strictly in accordance with its provisions and there is no scope for adding to its language or expanding its scope by any analogy or equitable considerations. The only remedy of the parties was to move the Controller under the proviso to section 12 of the Act for condonation of delay in filing the application, but the respondent has not thought it fit to do so. Even during the course of arguments, I asked the learned counsel if he had any explanation to offer for the delay at all events from 8th March, 1963, when the amendment came into force, to 20th August, 1964, when the petition was filed, but he said that he did not have any explanation to offer for the delay and he rested his claim on the legal right flowing from the amendment of the Act which I have held does not prescribe a new starting point of limitation."

Hence, the appeal was allowed and the judgment and order of the Rent Control Tribunal affirming the order of the Additional Rent Controller was set aside.

3. Kamla Devi v. Laxmi Devi, AIR 2000 SC 1640

Facts of the case: The appellant let out to the tenant a property bearing No. 417, Masjid Moth, New Delhi, adjacent to which there is an open plot of land measuring 9' x 7' (in short, suit plot), which is the subject-matter of the present appeal. The respondent had unauthorisedly constructed a laterine on the suit plot which gave cause to the appellant landlord to file a suit in the Court of Senior Sub-Judge, 1st Class, Delhi, praying for a mandatory injunction directing the respondent to demolish the construction made by her on the suit plot. Under a compromise the respondent became tenant of the suit plot on a monthly rent of Rs. 5 and consequently the suit was dismissed as withdrawn on March 27, 1978. By a notice dated December 19, 1983, the appellant terminated the tenancy, created under the said compromise and filed another suit for recovery of possession in the court of Senior Sub-Judge the Delhi, which was contested by the tenant on the sole ground that the suit plot was 'premises' within the meaning of the Delhi Rent Control Act, 1958, (in short the Act) and therefore, the suit was barred under section 50 of the said Act. The Trial Court held that the suit was premised as defined in section 2(i) of the Act, therefore, the suit was not maintainable and thus dismissed the same. Even the Appellate Court upheld the judgment of the Trial Court. The second appeal of the appellant was also dismissed by the High Court vide impugned judgment. Hence, the present appeal was filed by the appellant in the Supreme Court.

Findings of the Court: Supreme Court, after considering the definition of the term 'landlord', 'premises' and 'tenant' observed that the term 'premises' implies the subject-matter of tenancy in respect of which there is jural relationship of landlord and tenant and in respect of which the quantum of rent is agreed to between them.

When, in any case, the question arises whether an open plot of land or a plot of land with structures thereon, was let out, the Court has to determine the same on the facts of that case. In deciding this question, it will be useful to bear in mind that if the plot with structure was let out it will fall within the meaning of the term "premises' but if open plot without any structure was let out then it does not fall within the meaning of the term permises". It is immaterial whether the tenant raised structures before the creation of tenancy or after he was let in as a tenant. In either case, the tenant alone will have the proprietary rights in the structure and not the landlord.

Finally Court held that:

"In the instant case, the structure (latrine) was raised by the respondent unauthorisedly which was the subject-matter of the earlier suit wherein mandatory injunction for demolition of the same was prayed by the appellant. The structure (latrine) admittedly does not belong to the appellant. It belongs to the respondent who can at any time demolish the same and take away the material. While giving the suit plot on rent under the compromise the appellant agreed that instead of demolition it might be used by the respondent. But the appellant did not acquire any right in the structure (latrine) constructed unauthorised by the respondent."

"Since the basis of the tenancy between the parties is the compromise entered into between them in the earlier suit which was withdrawn on March 27, 1978 it is necessary to refer to the following relevant terms of the compromise:-

(i)that the defendant has raised the latrine on the open land of 9 x 7 in front of the door of house No. 417, Masjid Moth, New Delhi;

(ii)that the defendant has agreed to pay Rs. 5 per month to the plaintiff being rent of open land measuring 9'x 7' in front of the door of the house No. 417. Masjid Moth, New Delhi;

From a perusal of the clauses (i) and (ii), it is clear that though there is a reference to existence of a latrine on the suit plot, yet what was let out was open plot of land measuring 9' x 7' for which the agreed rent was Rs. 5 per month."

Hence the appeal was allowed and the suit of the appellant was decreed with costs.

4. Atma Ram Properties (P) Ltd. v. P.S. Jain Company Ltd., 57 (1995) DLT 131: 1995 (33) DRJ 178

Facts of the case: The plaintiff filed suit for eviction of the defendant - tenant impleading the sub-tenants also invoking the jurisdiction of the Civil Court on the ground that the premises are fetching monthly rent exceeding Rs. 3,500 p.m. and so the provisions of the Delhi Rent Control Act, 1958 (hereinafter 'the Act', for short) are excluded. The contention of the tenant, on the other hand is that insofar as he and the landlord-plaintiff are concerned, the agreed rent of the premises does not exceed Rs. 3,500 and so section 3(c) of the Act would not apply, the rent paid or payable by the sub-tenant to the tenant being irrelevant for the purpose of determining the applicability of the Act to a suit between a landlord and a tenant.

Findings of the Court: The Supreme Court observed as under:

"Clause (c) in section 3 has been inserted by Amending Act No. 57 of 1988 which came into force w.e.f. 1-12-88. Constitutional validity of the amendment was challenged, but the same has been upheld by the Supreme Court in D.C. Bhatia v. Union of India, MANU/SC/0516/1995: (1995) 1 SCC 104. Their Lordships have held that the term rent is used in the provision in its dictionary meaning and not as standard rent. Their Lordships have further held that though the Act was enacted to provide for the control of rent and eviction and of rates of hotels and lodging house etc. and in that sense was intended to protect the tenants, the amending act has a different purpose altogether. The various objects of the amendment include bringing about a balance between the interests of landlords and tenants and also giving a boost to house building activity. Whether a particular section of people requires protection or not has to be determined at any given point of time. The challenge laid to the validity of the classification on the basis of rent payable about the premises has been repelled by their Lordships holding that a person who can afford to pay more than Rs. 42,000 a year by way of rent will be by any standard considered as affluent person in society. He cannot be said to belong to the weaker section of the community. Their Lordships have further held that classification may be done on income basis or rental basis or some other basis and all such classifications are valid as they provide an understandable basis having regard to the object of the statute.

Section 3(c) of the Act does not speak of classification on the basis of rent received or paid by any person or individual; it speaks of premises whose monthly rent exceeds Rs. 3,500. Thus the same premises so long as their monthly rent does not exceed Rs. 3,500 shall enjoy the protection by applicability of the Act. No sooner the monthly rent exceeds Rs. 3,500, the act would cease to apply as the exclusion clause would be attracted.

In Bhatia Co-operative Housing Society v. D.C. Patel, MANU/SC/0064/1952: AIR 1953 SC 16, interpreting an exclusionary clause in a Bombay Act their Lordship have said, - "the Legislature did not intend to exempt the relationship of landlord and tenant but intended to confer on the premises belonging to Government an immunity from the operation of the Act." So also in Nagji Vallabhji & Co. v. Meghji Vejpar & Co., MANU/SC/0332/1988: AIR 1988 SC 1313, their Lordships have held, -"the exemption granted is in respect of the premises and not in respect of the relationship."

The Court further observed that in spite of the main Act having been enacted to protect the tenants assuming them to be weaker section of the society, wisdom dawned upon the Legislature to enact a provision taking out the premises carrying a monthly rent exceeding Rs. 3,500 from the ken of the Act because in its opinion such premises would not be enjoyed/occupied by persons belonging to weaker section of the society. In the case at hand the tenant having obtained the premises at a monthly rent not exceeding Rs. 3,500 did enjoy the protection of the Act. The protection is capable of being foregone in both the ways: the tenant may himself agree to enhance the rent so as to exceed Rs. 3,500 per month or he may sub-let the premises at monthly rent exceeding Rs. 3,500. In either case, the rent of the premises would exceed Rs. 3,500 per month and that would attract the applicability of section 3(c). A view to the contrary would create anamolous situation. Though the premises are in fact earning monthly rent exceeding Rs. 3,500 yet section 3 would not apply. So also in respect of the same premises in a suit filed by the landlord against the tenant section 3(c) would not apply but if a suit was to be filed by the tenant against sub-tenant in respect of the same very premises, section 3(c) would apply. The applicability of the Act would then have to be determined on the basis of persons and not the premises - a basis not intended by the Legislation. Even otherwise in D.C. Bhatia's case (supra) a person paying Rs. 42,000 a year cannot be weaker section of the society, so also a person earning Rs. 42,000 a year cannot be weaker section of the society.

Though rent is not defined in the Act, clause (1) of section 2 defines a 'tenant' to include a sub-tenant and clause (e) defines a landlord to mean a person who for the time being is receiving or is entitled to receive the rent of any premises. Insofar as the meaning of the term rent is concerned, there is no distinction between the rent paid by a tenant to a landlord and the rent paid by a sub-tenant to a tenant.

Hence the issue raised before the Delhi High Court was answered accordingly. The judgment was delivered by Division Bench of the Delhi High Court through R.C. Lahoti, J. Special Leave Petition filed against this judgment was also dismissed by the Supreme Court at the admission stage itself.

5. Atma Ram Properties (P) Ltd. v. Federal Motors Pvt. Ltd., MANU/SC/1047/2004: (2005) 1 SCC 705

Facts of the case: In the words of the Supreme Court, facts may be stated as under:

Sometime in the year 1992, the appellant initiated proceedings for the eviction of the respondent on the ground available under clause (b) of sub-section (1) of section 14 of the Act alleging that the respondent had illegally sublet the premises to Jay Vee Trading Co. Pvt. Ltd. and the sub-tenant was running its showroom in the premises. Vide order dated 19-3-2002, the Additional Rent Controller, Delhi held that the ground for eviction being made out and ordered the respondent to be evicted. The respondent preferred an appeal under section 38 of the Act. By order dated 12-4-2001, the Rent Control Tribunal directed the eviction of the respondent to remain stayed but subject to the condition that the respondent shall deposit in the Court Rs. 15,000 per month, in addition to the contractual rent which may be paid directly to the appellant. The deposits were permitted to be made either in cash or by way of fixed deposits in the name of the appellant and directed to be retained with the Court and not permitted to be withdrawn by either party until the appeal was finally decided. Raising a plea that the respondent could not have been directed during the pendency of the proceedings at any stage to pay or tender to the landlord or deposit in the Court any amount in excess of the contractual rate of rent, the respondent filed a petition under article 227 of the Constitution putting in issue the condition as to deposit Rs. 15,000 per month imposed by the Tribunal. By order dated 12-2-2002, which is impugned herein, the learned single Judge of the High Court has allowed the petition and set aside the said condition imposed by the Tribunal. The effect of the order of the High Court is that during the pendency of appeal before the Tribunal the respondent shall continue to remain in occupation of the premises subject to payment of an amount equivalent to the contractual rate of rent. Feeling aggrieved, the landlord (appellant) has filed this appeal by special leave.

Findings of the Court: It is well-settled that mere preferring of an appeal does not operate as stay on the decree or order appealed against nor on the proceedings in the court below. A prayer for the grant of stay of proceedings or on the execution of decree or order appealed against has to be specifically made to the Appellate Court and the Appellate Court has discretion to grant an order of stay or to refuse the same. The only guiding factor, indicated in the rule 5 aforesaid, is the existence of sufficient cause in favour of the appellant on the availability of which the Appellate Court would be inclined to pass an order of stay. Experience shows that the principal consideration which prevails with the Appellate Court is that in spite of the appeal having been entertained for hearing by the Appellate Court, the appellant may not be deprived of the fruits of his success in the event of the appeal being allowed. This consideration is pitted and weighed against the other paramount consideration: why should a party having succeeded from the Court below be deprived of the fruits of the decree or order in his hands merely because the defeated party has chosen to invoke the jurisdiction of a superior forum. Still the question which the Court dealing with a prayer for the grant of stay asks to itself is: Why the status quo prevailing on the date of the decree and/or the date of making of the application for stay be not allowed to continue by granting stay, and not the question why the stay should be granted. Court further held:

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 the statutory right conferred on the appellant. So also, an Appellate Court is not required 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 Madhya Pradesh, MANU/SC/0807/2003: (2003) 8 SCC 648, 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 successful party 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 of the 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 in so far 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. Robust commonsense, 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 Corporation, MANU/SC/0039/1985: (1985) 3 SCC 545, "commonsense which is a cluster of life's experiences, is often more dependable than the rival facts presented by warring litigants".

Under the general law, and in cases where the tenancy is governed only by the provisions of the Transfer of Property Act, 1882, once the tenancy comes to an end by determination of lease under section 111 of the Transfer of Property Act, the right of the tenant to continue in possession of the premises comes to an end and for any period thereafter, for which he continues to occupy the premises, he becomes liable to pay damages for use and occupation at the rate at which the landlord could have let out the premises on being vacated by the tenant. In the case of Chander Kali Bai (supra) the tenancy premises were situated in the State of Madhya Pradesh and the provisions of the Madhya Pradesh Accommodation Control Act, 1961 applied. The suit for eviction was filed on 8th March, 1973 after serving a notice on the tenant terminating the contractual tenancy w.e.f. 31st December, 1972. The suit came to be dismissed by the Trial Court but decreed in first appeal decided on 11th August, 1975. One of the submissions made in this Court on behalf of the tenant-appellant was that no damages from the date of termination of the contractual tenancy could be awarded; the damages could be awarded only from the date when an eviction decree was passed. This Court took into consideration the definition of tenant as contained in section 2(i) of the Madhya Pradesh Act, which included "any person continuing in possession after the termination of his tenancy" but did not include "any person against whom any order or decree for eviction has been made". The court, persuaded by the said definition, held that a person continuing in possession of the accommodation even after the termination of his contractual tenancy is a tenant within the meaning of the Madhya Pradesh Act and on such termination his possession does not become wrongful until and unless a decree for eviction is passed. However, the Court specifically ruled that the tenant continuing in possession even after the passing of the decree became a wrongful occupant of the accommodation. In conclusion the Court held that the tenant was not liable to pay any damages or mesne profits for the period commencing from 1st January, 1973 and ending on 10th August, 1975 but he remained liable to pay damages or mesne profits from 11th August, 1975 until the delivery of the vacant possession of the accommodation. During the course of its decision this Court referred to a decision of Madhya Pradesh High Court in Kikabhai Abdul Hussain v. Kamlakar, 1974 MPLJ 485, wherein the High Court had held that if a person continues to be in occupation after the termination of the contractual tenancy then on the passing of the decree for eviction he becomes a wrongful occupant of the accommodation since the date of termination. This Court opined that what was held by the Madhya Pradesh High Court seemed to be a theory akin to the theory of "relation back" on the reasoning that on the passing of a decree for possession, the tenant's possession would become unlawful not from the date of the decree but from the date of the termination of the contractual tenancy itself. It is noteworthy that this Court has not disapproved the decision of the Madhya Pradesh High Court in Kikabhai Abdul Hussain's case but distinguished it by observing that the law laid down in Kikabhai Abdul Hussain's case was not applicable to the case before it in view of the definition of 'tenant' as contained in the Madhya Pradesh Act and the provisions which came up for consideration of the High Court in Kikabhai Abdul Hussain's case were different.

Finally Supreme Court laid down:

"We are, therefore, of the opinion that the tenant having suffered a decree or order for eviction may continue his fight before the superior forum but, on the termination of the proceedings and the decree or order of eviction first passed having been maintained, the tenancy would stand terminated with effect from the date of the decree passed by the lower forum. In the case of premises governed by rent control legislation, the decree of eviction on being affirmed, would be determinative of the date of termination of tenancy and the decree of affirmation passed by the superior forum at any subsequent stage or date, would not, by reference to the doctrine of merger have the effect of postponing the date of termination of tenancy.

In the Delhi Rent Control Act, 1958, the definition of 'a tenant' is contained in clause (l) of section 2. Tenant includes 'any person continuing in possession after the termination of his tenancy' and does not include 'any person against whom an order or decree for eviction has been made'. This definition is identical with the definition of tenant dealt with by this Court in Chander Kali Bai case, MANU/SC/0366/1977: (1977) 4 SCC 402. The tenant-respondent herein having suffered an order for eviction on 19-3-2001, his tenancy would be deemed to have come to an end with effect from that date and he shall become an unauthorized occupant. It would not make any difference if the order of eviction has been put in issue in appeal or revision and is confirmed by the superior forum at a latter date. The date of termination of tenancy would not be postponed by reference to the doctrine of merger.

That apart, it is to be noted that the Appellate Court while exercising jurisdiction under Order 41, rule 5 of the Code did have power to put the tenant-appellant on terms. The tenant having suffered an order for eviction must comply and vacate the premises. His right of appeal is statutory but his prayer for grant of stay is dealt with in exercise of equitable discretionary jurisdiction of the Appellate Court. While ordering stay the Appellate Court has to be alive to the fact that it is depriving the successful landlord of the fruits of the decree and is postponing the execution of the order for eviction. There is every justification for the Appellate Court to put the tenant-appellant on terms and direct the appellant to compensate the landlord by payment of a reasonable amount which is not necessarily the same as the contractual rate of rent. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd., MANU/SC/0079/1999: (1999) 2 SCC 325, this Court has held that once a decree for possession has been passed and execution is delayed depriving the judgment-creditor of the fruits of decree, it is necessary for the Court to pass appropriate orders so that reasonable mesne profits which may be equivalent to the market rent is paid by a person who is holding over the property."

To sum up, conclusions are:-

(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 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 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 latter date.

In the case at hand, it was observed that it has to be borne in mind that the tenant has been paying Rs. 371.90 p.m. rent of the premises since 1944. The value of real estate and rent rates have skyrocketed since that day. The premises are situated in the prime commercial locality in the heart of Delhi, the capital city. It was pointed out to the High Court that adjoining premises belonging to the same landlord admeasuring 2000 sq. ft. have been recently let out on rent at the rate of Rs. 3,50,000 per month. The Rent Control Tribunal was right in putting the tenant on term of payment of Rs. 15,000 per month as charges for use and occupation during the pendency of appeal. The Tribunal took extra care to see that the amount was retained in deposit with it until the appeal was decided so that the amount in deposit could be disbursed by the Appellate Court consistently with the opinion formed by it at the end of the appeal. No fault can be found with the approach adopted by the Tribunal. The High Court has interfered with the impugned order of the Tribunal on an erroneous assumption that any direction for payment by the tenant to the landlord of any amount at any rate above the contractual rate of rent could not have been made.

For the foregoing reasons, the appeal was allowed and the order of the High Court was set aside and that of the Tribunal restored with costs permitting.