Summary
Cross-appeals over the per-square-foot rate of mesne profits payable by a public sector undertaking that remained in occupation of Harchandrai House, Mumbai, after an eviction decree. The Supreme Court declined to interfere with the High Court's uniform rate of Rs 160 per sq. ft. per month, held that a Government or PSU tenant is entitled to no special consideration, reduced the interest to 6% simple per annum payable within three months, and requested the Chief Justice of the Bombay High Court to examine the pendency of landlord-tenant disputes.
Issues
- Whether the High Court's determination of mesne profits at a uniform rate of Rs 160 per sq. ft. per month called for interference.
- Whether a tenant that is a public sector undertaking deserves any special consideration in fixing mesne profits.
- What rate of interest should apply to the mesne profits.
Provisions considered
- Section 3(1)(b), Maharashtra Rent Control Act, 1999The High Court had observed that the tenant, a public sector undertaking, had to vacate only because it lost rent-control protection under Section 3(1)(b) and would otherwise have continued as a protected tenant. The Supreme Court did not endorse this: it was the landlord who terminated the tenancy, and neither being the Government nor being a PSU entitles a tenant to extra consideration. (¶¶ 9, 11)
Held
- Once an order of ejectment has been passed, the tenant has no right to continue in possession and enjoyment of the property and entitlement to mesne profits is established; as held in Bijay Kumar Manish Kumar (HUF) v. Ashwin Bhanulal Desai, following Achal Misra, a tenant is liable to pay rent equivalent to mesne profits from the date he ceases to be entitled to retain possession, and the landlord's entitlement for that period is not pegged to the standard rent. No reason was found to interfere with the High Court's finding on the rate. (¶¶ 10, 11)
- A PSU, even though substantially owned by the Government, stands on the same footing as any other tenant and cannot be given special treatment; being the Government does not entitle a tenant to any extra consideration, and it was the landlord who had sent the notice terminating the tenancy. (¶ 11)
- Without disturbing the High Court's overall conclusion, the rate of interest was reduced to 6% simple per annum, and the entire sum was directed to be paid by the tenant within three months. (¶ 12)
- The dispute remained in the courts for more than two and a half decades and the mesne-profits application alone took over eleven years; in landlord-tenant disputes delayed adjudication makes both sides suffer, and courts are duty bound to ensure that no party suffers on their account. The Chief Justice of the Bombay High Court was requested to call for a report on the pendency of landlord-tenant disputes and, if warranted, to take steps or issue directions for their expeditious disposal. (¶¶ 13, 14)
Result
Civil appeals disposed of; High Court's uniform rate of mesne profits of Rs 160 per sq. ft. per month upheld; rate of interest modified to 6% simple per annum; tenant to pay the entire sum within three months; Chief Justice of the Bombay High Court requested to examine pendency of landlord-tenant disputes; pending applications disposed of.