Summary
An eviction decree was passed for leased land at Worli, Mumbai. The Bombay High Court stayed it in revision on condition that the tenant pay Rs 2.5 lakh a month. It reached that figure as a 6.5% return on the Rs 5.5 crore that the transferee lessor had paid for the property in 2008. The Supreme Court held that method wrong. Under Atma Ram Properties and Super Max International, compensation while an eviction decree is stayed is the rent the landlord could have earned by letting the premises had the tenant vacated. The price at which the landlord acquired the property is not the measure. The matter was remitted to the High Court, with Rs 2.5 lakh a month to be deposited in the interim.
Issues
- Whether, as a condition for staying an eviction decree in revision, the High Court could fix compensation for use and occupation as a 6.5% annual return on the price at which the landlord acquired the property.
Held
- From the date of the eviction decree the tenant is liable to pay mesne profits or compensation at the rate at which the landlord could have let out the premises had the tenant vacated, not at the contractual rent, and the court staying the decree may impose terms reasonably compensating the decree-holder, though it must not fix an excessive, fanciful or punitive amount. (¶¶ 7.1, 7.2)
- The High Court's method of applying a 6.5% return to the Rs 5.50 crore price paid in 2008 by the transferee lessor is unsound, since a landlord who bought long ago would on that basis receive unreasonably low compensation; the High Court had to determine the rent the premises would fetch if vacated. (¶¶ 7, 7.2)
- The matter is remitted for fresh determination within six months, the parties being permitted to lead evidence on the rent obtainable, with the tenant meanwhile to deposit at least Rs 2,50,000 per month from the date of the eviction decree, subject to the final determination. (¶¶ 7.3, 8)
Result
Civil Appeal No. 7774 of 2022 partly allowed; the Bombay High Court's order dated 05.11.2020 in Civil Revision Application No. 357 of 2017 fixing compensation at Rs 2,50,000 per month set aside and the matter remitted for fresh determination, with interim deposit of at least that sum; no costs.