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M/S. Atma Ram Properties (P) Ltd Vs. M/S. Federal Motors Pvt. Ltd 

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Citations: S.L.P. (C) No.6415 of 2002]

Case Type: Appeal (civil)

Case No: 7988 of 2004

Decided On: 10 December, 2004

Petitioner: M/s. Atma Ram Properties (P) Ltd.

Respondent: M/s. Federal Motors Pvt. Ltd,

Bench: Cji R.C. Lahoti, G.P. Mathur

Statutes Referred:

Delhi Rent Control Act,1958

Clause (b) of sub-Section (1) of Section 14 , Section 38 of the Act,

 Article 227 of the Constitution,

Transfer of Property Act,1882

 M.P. Act

Cases Referred:

Shyam Sharan vs. Sheoji Bhai & Anr. (1977) 4 SCC 393

Kunhayammed & Ors vs. State of Kerala & Anr., (2000) 6 SCC


The suit sites are non-residential commercial premises admeasuring almost 1000 sq. ft. and situated in Connaught Circus, New Delhi. The premises are owned by the appellant and persisted tenancy by the respondent on a monthly rent of Rs.371.90p. per month.

The tenancy had commenced sometime within the year 1944 and it appears that ever since then the rent has remained static. Indeed, the requirements of the Delhi Rent Control Act 1958, (hereinafter ‘the Act’, for short) are applicable to the premises.

Sometime in the year 1992, the appellant initiated proceedings for the eviction of the respondent on the bottom available under Clause (b) of sub-Section (1) of Section 14 of the Act alleging that the respondent had illegally leased the premises to M/s. Jay Vee Trading Co. Pvt. Ltd. and therefore the sub- tenant was running its showroom within the premises.

Vide order dated 19.3.2002, the extra Rent Controller, Delhi held the bottom for eviction 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 stay stayed but subject to the condition that the respondent shall deposit within the Court Rs.15,000/- per month, additionally to the contractual rent which can be paid on to the appellant. The deposits were permitted to be made either in cash or by way of fixed deposits within the name of the appellant and directed to be retained with the Court and not permitted to be withdrawn by either party until the appeal was finally decided.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 couldn’t are directed during the pendency of the proceedings at any stage to pay or tender to the owner or deposit within the Court any amount in more than the contractual rate of rent, the respondent filed a petition under Article 227 of the Constitution fixing issue the condition on 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 supreme court has allowed the petition and put aside the said condition imposed by the Tribunal. The effect of the order of the Supreme Court is that in the pendency of appeal before the Tribunal the respondent shall still remain in occupation of the premises subject to payment of an amount like the contractual rate of rent. Feeling aggrieved, the owner (appellant) has filed this appeal by special leave.

Issues Involved:

This appeal raises a problem of frequent recurrence and, therefore, we’ve heard the learned counsel for the parties at length. Landlord-tenant litigation constitutes an outsized chunk of litigation pending within the Courts and Tribunals.

The litigation goes on for unreasonable length of your time and therefore the tenants in possession of the premises don’t miss any opportunity of filing appeals or revisions goodbye as they will thereby afford to perpetuate the lifetime of litigation and continue in occupation of the premises.

If the plea raised by the learned senior counsel for the respondent was to be accepted, the tenant, in spite of getting lost at the top , doesn’t lose anything and rather stands to realize as he has enjoyed the utilization and occupation of the premises, earned also tons from the premises if they’re non-residential in nature and every one that he’s held susceptible to pay is damages to be used and occupation at an equivalent rate at which he would have paid even otherwise by way of rent and a touch amount of costs which is usually insignificant.

Observations/Obiter Dicta:

“This Court took into consideration the definition of tenant as contained in Section 2(i) of the M.P. 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 M.P. 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 Vs. 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 M.P. Act and the provisions which came up for consideration of the High Court in Kikabhai Abdul Hussain’s case were different.”


The order of eviction gone by Rent Controller is appealable to the Rent Control Tribunal under Section 38 of the Act. There is no specific provision within the Act conferring power on the Tribunal to grant stay the execution of the order of eviction gone by the Controller, but sub-Section (3) of Section 38 confers the Tribunal with all the powers vested during a Court under the Code of Civil Procedure, 1908 while hearing an appeal.

The supply empowers the Tribunal to pass an order of stay by regard to Rule 5 of Order 41 of the Code of Civil Procedure 1908 (hereinafter ‘the Code’, for short). The order of the Supreme Court is about aside which of the Tribunal restored with costs incurred within the Supreme Court and during this Court. However, the tenant-respondent is allowed six weeks’ time, calculated from today, for creating deposits and clearing the arrears up to the date according to the order of the Rent Control Tribunal.


“In the case at hand, it has to be borne in mind that the tenant has been paying Rs.371.90p. 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”.

‘We cannot countenance the view taken by the High Court. We may place on record that it has not been the case of the tenant- respondent before us, nor was it in the High Court, that the amount of Rs.15, 000/- assessed by the Rent Control Tribunal was unreasonable or grossly on the higher side. For the foregoing reasons, the appeal is allowed. The order of the High Court is set aside and that of the Tribunal restored with costs incurred in the High Court and in this Court. However, the tenant-respondent is allowed six weeks’ time, calculated from today, for making deposits and clearing the arrears up to the date consistent with the order of the Rent Control Tribunal.”


While passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure, 1908, the appeals court does have jurisdiction to place 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, within the event of the appeal being dismissed and in thus far as those proceedings are concerned. Such terms, needless to mention, shall be reasonable.

In case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in sight of the definition of tenant contained in clause (l) of Section 2 of the Act, the tenancy doesn’t stand terminated merely by its termination under the overall law; it terminates with the passing of the decree for eviction.

With effect from that date, the tenant is susceptible to pay mesne profits or compensation to be used and occupation of the premises at an equivalent rate at which the owner would are ready to let loose the premises and earn rent if the tenant would have vacated the premises. The owner isn’t bound by the contractual rate of rent effective for the amount preceding the date of the decree;

The doctrine of merger doesn’t have the effect of postponing the date of termination of tenancy merely because the decree of eviction stands merged within the decree gone by the superior forum at a later date.