(1.) 1 Rule. With the consent of the Learned Counsel for the parties made returnable forthwith and heard.
(2.) The Writ Jurisdiction of this Court is invoked against the order dated 18-3-2017 passed by the Appellate Bench of the Small Causes Court on the application Exhibit 7
filed by the Petitioners / original Appellants in Appeal No.305 of 2016 filed by the Petitioners before
the Appellate Bench of the Small Causes Court, Mumbai. By the said order, the said application for
stay pending the Appeal was allowed in terms of the operative part of the impugned order. The said
operative part stipulates that the Petitioners to pay interim compensation @ Rs.10,00,000/- (Ten
Lakhs) per month to the Respondents and also to furnish undertakings as directed by the said
operative part of the order.
(3.) The facts necessary for adjudication of the above Writ Petition can in a nutshell be stated thus: The Petitioners herein are the heirs of the original lessee one Hashambhai Jetha who was granted a
lease of a plot of land admeasuring 3341 sq. yards by an Indenture of Lease dated 7-4-1941, along
with the said plot the said Hashambhai Jetha was granted another plot by assignment admeasuring
109 sq.yards which is part of the same property. The schedule to the said Lease Deed i.e. Schedule A and B make a reference to the said two plot of lands. As indicated above the Petitioners are the heirs
of the original lessee i.e. the said Hashambhai Jetha, whereas the Respondents are the heirs of the
original lessor i.e. Bai Khatubai. The Petitioners are the Defendants in the Suit in question being R.
A. E. Suit No.202/972 of 1973, whereas the Respondents are the original
Plaintiffs who have filed the said Suit. The said Lease Deed contained a recital to the effect that in
consideration of the expenses incurred by the tenant i.e. the said Hashambhai Jetha in erection and
completion of the structures or sheds hereinafter mentioned and all the rent that the lessor i.e. the
landlady has demised unto the tenant all that piece or parcel of land and the premises more
particularly described in the first schedule. The lease also contains a recital in respect of the
assignment that the lessor assigns unto the tenant all her right, title and interest in that piece or
parcel of land and premises more particularly described in the second schedule and delineated on
the plan. The said Lease Deed also contains a covenant that on the termination of the tenancy, the
tenant to yield up the said premises with all the structures or sheds or buildings erected thereon
meaning thereby that the tenant was required to hand over possession not only of the land but the
structures, sheds and buildings erected thereon. 4 The landlady called upon the lessee to pay the
arrears of the lease rent failing which the lease would stand terminated. Accordingly the tenancy of
the said premises came to be terminated by the landlady by notice dated 7- 7-1992. The landlady
thereafter filed the Suit in question i.e. R.A.E. Suit No.202/972 of 1973 which was filed by one
Resubai Chinoy against Hashambhai Jetha and Akbarali Jetha on the ground of default. For the
purposes of the present Petition, suffice it would be to state that the said Suit came to be decreed by the Trial Court by judgment and order dated 9-3-2016. The
Defendants i.e. the Petitioners herein aggrieved by the said decree filed an Appeal before the
Appellate Bench of the Small Causes Court being Appeal No.304 of 2016. In the said Appeal, the
Appellants i.e. the Petitioners herein filed Exhibit 7 for stay of the decree passed by the Trial Court.
Since the issue was of granting stay having regard to the provisions of Order XLI Rule 5 of the Civil
Procedure Code and having regard to the fact that the Appellate Court was likely to put the
Appellants to terms in the matter of payment of interim compensation as a condition for stay of the
decree, the parties filed valuation reports. The Petitioners filed the valuation report of one M/s. S.M.
Kini & Co., whereas the Respondents filed the valuation report of Mr. H.S. Maniar, Chartered
Engineer, Surveyor and Registered Estate Valuer. As can be seen from the said reports, the said
valuers adopted 3 identical methods of valuation. The valuation based on the Ready Reckoner
published by the State of Maharshtra, the capitalisation of the rent method and the instances of sale.
The Appellate Bench did not deem it appropriate to accept the valuation as made either by M/s S.
M. Kini & Co. or Mr. H. S. Maniar for the reasons mentioned in its order. In so far as the report of
Mr. H. S. Maniar is concerned the Appellate Bench observed that the valuers have proceeded on the
basis of wrong parameters in so far as zoning, F.S.I. Etc is concerned. The Appellate Bench observed
that though it is true that the Respondents were lessors and the owners of the structures, the
Appellants cannot deny the claim of the contesting Respondents in
considering the income from the structures as one of the parameters for fixing the interim
compensation. The Appellate Bench further observed that the Appellants cannot forget the fact that
the structures are standing on the land let out by the contesting Respondents and that the tenancy of
the Appellants has been terminated which has been accepted by the Trial Court by passing a decree
The Appellate Bench observed that the figure of Rs.3,62,409/- as concluded by M/s S. M. Kini & Co.
is on the lower side and that it is arrived at by over looking certain parameters. The Appellate Bench
in so far as report of Mr. H. S. Maniar is concerned, observed that it is on a higher side. According to
the Appellate Bench he too has taken into consideration wrong parameters (wrong zone, nature of
ownership, access to rate, incorrect FSI, high rate of return). The Appellate Bench observed that it is
not accepting the valuation done by the said valuers at Rs.27,38,350/- per month, since it is on the
higher side. The Appellate Bench concluded that the contesting Respondents are entitled to receive
Rs.10,00,000/- per month as interim compensation. The Appellate Bench accordingly allowed the
application Exhibit 7 filed by the Appellants i.e. the Petitioners herein on the condition of the
Appellants depositing Rs.10,00,000/- per month as interim compensation and directed the arrears
to be paid in terms of the directions contained in the operative part of the impugned order. The
Appellate Bench also directed the interim compensation to be deposited in
a nationalised bank for a period of one year. The Appellate Bench has also directed the Petitioners
i.e. the Appellants before it to give undertaking in terms of the directions as contained in the
operative part of its order. The said directions are reproduced hereinunder for the sake of ready
"(i) Within 15 days from today, appellants to give details of the structures (total numbers, area, floors and the persons in occupation as per leave and licence agreements) standing on both the suit lands by way of undertaking on affidavit.
(ii) Appellants to inform respective licensees (7 in numbers):-
(a) Within 15 days from today about pendency of this appeal.
(b) Appellants to seek their approval prior to effect change if any in their constitution which is having effect on the right over respective licenced premises standing on the suit land.
(iii) Within two months from today Appellants to file undertaking along with annxtures about giving information to the licensees as directed above.
(iv) Within 15 days from today Appellants to give fresh undertaking about not creating third party interest in respect of suit land and in respect of structures standing on the suit land (other than in favour of licesees mentioned in the reply dated 26.08.2016 filed by contesting respondents) till disposal of the appeal.
(v) Appellants to seek leave of the Court prior to entering into any sort of fresh transaction with existing licensees of these structures."
As indicated above, it is the said order dated 18-3-2017 which is taken exception to by way of the above Petition.
5 The Learned Counsel appearing on behalf of the Petitioners Mr. Sanglikar would make the following submissions :
(I) The interim compensation fixed is on a higher side considering that what was leased out to the Petitioners was only land and not structures which are of the ownership of the Petitioners.
(II) That the interim compensation to be fixed has to be in terms of the parameters laid down by the Apex Court in the judgment in the matter of Atma Ram Properties (P) Ltd. Vs. Federal Motors Pvt Ltd. 1 and in the matter of State of Maharashtra Vs. M/s. Supermax International Pvt Ltd. 2 and the principles laid down by a Learned Single Judge of this Court in the judgment in the matter of Chandrakant Dhanu and anr Vs. Shamla Kapur and Ors3. 1 2005(1)SCC 705 2 AIR 2010 SC 722 3 2009(2)AIR Bom R 458
(III) The Appellate Bench has erred in taking into consideration the income derived from the structures, as the structures are of the ownership of the Appellants i.e. the Petitioners. Reliance is placed on the judgment of the Apex Court in the matter of M. L. Yacob Sheriff (Deceased) by heirs Vs. Rajrani Devi4 (IV) That the interim compensation ought to be a percentage of the licence fees prevalent in the market and not at the market rate itself. Reliance is placed on the judgment of a Learned Single Judge of this Court in the matter of Marjorie Passanah and Anr. Vs. Mumtaz Iqbal Shaikh 5 (V) That there cannot be any subletting having regard to the covenants of the Lease Deed as the Petitioners were having a right to let out the structures in the instant case the structures have been let out to the family concerns.
6 Submissions made by the Learned Counsel appearing on behalf of the Respondents Ms Parikh:
(I) That the Petitioners who are in Appeal against a decree of eviction cannot be heard to say that they are not liable to pay licence fees at the 4 AIR 2004 Supreme Court 1200 5 2009(1)MhLJ 972 prevalent market rate as interim compensation.
(II) That the Petitioners have during the pendency of the Suit have leased out the sheds constructed on the plot of land out of which they are deriving handsome income.
(III) That having regard to the market rate prevalent of the licence fees, the interim compensation fixed by the Appellate Bench cannot be said to be exorbitant, excessive or fanciful.
(IV) That the conduct of the Petitioners can be seen from the fact that the Petitioners have not denied the letting out of the structures / sheds pending the Suit as the allegations made by the Respondents in that regard have not been denied by the Petitioners.
(V) The conduct of the Petitioners is such that they are not entitled to the exercise of any discretion in the matter of payment of interim compensation in their favour.
7 Having heard the Learned Counsel for the parties, I have considered the rival contentions. The issue which arises for consideration is whether the order passed by the Appellate Bench of the Small
Causes Court imposing conditions for stay as imposed by the impugned
order requires any interference at the hands of this court in its Writ Jurisdiction under Article 227 of
the Constitution of India. The issue of grant of stay pending the Appeal or Revision in the Appellate
Forum had come up for consideration before the Apex Court in the Judgment of Atma Ram
Properties (P) Ltd. (supra). The Apex Court in the said case having regard to the Order XLI Rule 5 of
the Civil Procedure Code held that the grant of stay and the conditions that can be imposed on the
Appellants are to be founded inter alia on the following facts :
(I) The security to be furnished for the due performance of the decree or order as may be ultimately passed being furnished by the Applicants for stay as a condition precedent to the grant of order of stay.
(ii) The power to grant stay is discretionary and flows from the jurisdiction conferred on an Appellate Court which jurisdiction is equitable in nature.
(iii) The Appellants seeking an order of stay must do equity for seeking equity. (iv) The Apex Court may put the party seeking stay on such terms the enforcement whereof would satisfy the demand for justice of the party found successful at the end of the Appeal.
(v) The Apex Court does have the jurisdiction to put the party seeking stay order on such terms as would reasonably compensate the party which is successful at the end of the Appeal.
(vi) The Apex Court thereafter concluded that robust common sense, common knowledge of holding affairs and things gained by judicial experience and judicially noticeable facts over and above the material available on record thus provide inputs of relevant facts for exercise of discretion while passing an order and formulating the terms to put the parties on. 8 The Apex Court in Supermax International Pvt. Ltd. (supra) which matter was heard by a three Judge Bench of the Apex Court held that there was no conflict between Atma Ram Properties (P) Ltd. (supra) and Niyaz A Khan's case the Apex Court held that in any Appeal or Revision stay of the execution of the decree passed by the courts below cannot be asked as a matter of right. It is open to the Appellate or Revisional Court to stay the execution of the order or decree on terms including a direction to pay monthly rent at the rate higher than the contractual rent. The Court would exercise restraint and would not fix any excessive, fanciful or punitive amount.
9 The judgment in Atma Ram Properties (Supra) as also the other judgments on the said issue were cited before a Learned Single Judge of this Court in Chandrakant
Dhanu's case. The Learned Judge in Chandrakant Dhanu's case culled out the principles which flow
out of the said judgment. The said principles are revolving around what the Apex Court has held in
Atma Ram Properties (P) Ltd and Supermax International Pvt Ltd. (Supra). It is therefore not
necessary to dilate on the said principles any further. Thereafter another Learned Single Judge in
Marjorie Passanah's case (supra) having regard to the Judgment of the Apex Court held that a
balance would have to be struck in weighing the equities so that there is no substantial loss to either
party. The Learned Single Judge held that the Court may consider as to what percentage of the
market value in terms of licence fees the premises in question can fetch could be termed as
reasonable. The Learned Single Judge thereafter has laid down the basis on which the amount as
interim compensation can be fixed.
10 Now coming to the facts of the instant case as indicated above, the plot admeasuring 3341 sq.yards equivalent about 28000 sq.ft. was granted on lease basis to the predecessor of the
Petitioners and a plot admeasuring 109 sq.yards equivalent to about 800 sq.ft. in the same property
was assigned to the predecessor of the Petitioners. There is no dispute about the fact that there are
structures and sheds put up by the Petitioners on the said plot of land. The said structures and sheds during pendency of the Suit have been granted on leave and
licence basis to various parties by the Petitioners. The said leave and licence agreements which have
been brought on record by the Respondents and the area and the licence fees payable thereunder are
tabulated herein under:
Name of Licensee Area Licence fees Deposit
1 Counsulate General of 800 sq.ft. Licence fees Rs.2,00,000/- Canada Rs.88,200/-
2 Blueme Venture Advisors Pvt 848 sq.ft. Licence fees Rs.5,50,000/- Ltd. Rs.91,800/-
3 Audio compass (India) Pvt 589 sq.ft. Licence fees Rs.2,12,040/- Ltd. Rs.70,680/-
4 Supernovo Retail Pvt Ltd. 200 sq.ft. Licence fees Rs.1,26,000/- Rs.21,000/-
5 New Jen Internet Working 2685 sq.ft. Licence fees Rs.16,00,000/ Pvt Ltd. Rs.1,87,500/- -
6 Zoomin Online India Pvt 6865 sq.ft. Licence fees Rs.43,20,600/ Ltd. Rs.4,32,500/- -
7 S. K. Constalation BLU 1775 sq.ft. Licence fees Rs.8,00,000/- Advisory Pvt Ltd. Rs.1,40,000/-
Hence as can be seen from the above table, the Petitioners have let out the said structures and sheds
to various parties by taking rent free deposit and also payment of substantial licence fees. The
licence fees as can be seen that is realised by the Petitioners is in the region of Rs.10,00,000/- per
month. The agreements also provide for enhancement of licence fees to the extent of 5 to 10% every
year or every two years. As indicated above, the decree has been passed
against the Petitioners i.e. the original Defendants on the ground of subletting. Whether the letting
out of structures and sheds by the Petitioners amounts to subletting is a matter which obviously can
be gone into at the hearing of the Appeal. This Court therefore is not required to go into the said
aspect in the present proceedings. However, the fact remains that the valuation of the property and
the return that the suit premises would fetch, would be contingent upon the licence fees that the
structures and the sheds are fetching the Petitioners.
11 In so far as the reports of M/s S. M. Kini and Co. and Mr. H. S. Maniar are concerned, as indicated above both the valuers are registered estate valuers and they have carried out the exercise of
valuation by adopting three methods i.e. the ready reckoner method, multiplier method and the
licence fees method. After carrying out the said exercise the valuers of the Petitioners have
concluded that the fair market rent of the property would be in the region of Rs.3,62,409/- whereas
the valuers of the Respondents Mr. H. S. Maniar has concluded that the valuation would be
Rs.27,38,353/-. However, as observed by the Appellate Bench of the Small Cause Court the said
valuation has been carried out by the valuer Mr. H. S. Maniar by considering wrong parameters i.e.
the wrong zone, nature of ownership, access to road, incorrect FSI, high rate of return. The
Appellate Bench of the Small Causes Court has therefore observed that the valuation of M/s S.M.
Kini & Co. is too low whilst the valuation of Mr. H.S. Maniar is too high
and has therefore not deemed it appropriate to go by the valuation of both the valuers but has
chosen to fix the interim compensation by taking various factors into consideration and thereafter
has come to a conclusion that Rs.10,00,000/- would be the correct interim compensation that
would be payable by the Petitioners to the Respondents pending the Appeal. It would be apposite to
refer to the principles laid down by the Apex Court in Atma Ram Properties (Supra). The Apex Court
as indicated above has held that the power to grant stay of the decree passed by the Trial Court is a
discretion to be exercised by the Appellate Court. The Apex Court can be said to have crystallised the
conditions that can be imposed by observing that the party seeking a stay order can be granted such
stay on such terms as would reasonably compensate the party which is successful at the end of the
Appeal. The Apex Court in Supermax International Pvt Ltd. (Supra) has held that whilst carrying
out the said exercise the court would exercise restraint and would not fix any excessive, fanciful or
12 It was the submission of Shri Sanglikar that in terms of the Judgment of the Learned Single Judge in Chandrakant Dhanu's case, the Petitioners i.e. the original Appellants cannot be directed to
pay more than a percentage of the prevalent market licence fees. In my view, it is not possible to
accept the said contention as the factor relied upon by Mr. Sanglikar is only one of the factors amongst other factors which are to be taken into consideration whilst
fixing the interim compensation as a condition for grant of stay, but the same would also depend on
the facts and circumstances of each case. The Judgment of the Apex Court in Yacob's case (supra)
would also have no application as in the said case the issue was of fixation of fair rent i.e. the
standard rent under the Bombay Rent Act and it is in the said context that the Apex Court held that
the value of the structures has no relevance. The facts of the instant case can be distinguished from
the facts of the case that were there before the Apex Court in Yacob''s case (supra) as in the instant
case, the Petitioners are faced with a decree of eviction in respect of which decree they have sought a
stay and therefore the Appellate Bench of the Small Causes Court was entitled to take into
consideration amongst other things the monetary benefit that the Petitioners were deriving out of
the structures and sheds. It is required to be noted that the suit premises i.e. the land is situated in
Byculla that is in South Mumbai and it is about 4 to 5 kilometers from V. T. Station or Chatrapati
Shivaji Terminus. The said land can therefore be said to be a prime property in the context of its
location. The Petitioners are exploiting the said plot of land which has been leased and assigned to
them by letting out the sheds and the structures which have been constructed on the said land. The
tabular statement reproduced hereinabove shows that the licencees are Companies as well as the
Canadian Consulate from whom the Petitioners have taken rent free deposit as also are getting
handsome licence fees. The conduct of the Petitioners shows that they
have let out the premises when the Suit was pending. As can be seen from the tabular statement for
an area of 6865 sq.ft. the Petitioners are getting licence fees of Rs.4,32,500/- per month. Faced with
the situation wherein the valuation report produced by the Petitioners shows very low figure of
Rs.3,62,409/- and the valuation report of the Respondents shows a very high figure of
Rs.27,38,353/-. The Appellate Bench of the Small Causes Court took upon itself to fix the
compensation having regard to the following factors namely land being lease hold, zone in which
land is situatedd, available FSI, non touch road, structures being licenced, non onerous to the
Appellants and non denying the right of the Appellants and fixed the compensation at
Rs.10,00,000/- per month and also directed the deposit of said amount from a particular date and
directed the Petitioners to furnish undertaking in terms of the operative part of the impugned order.
13 In so far as the amount fixed by the Appellate Bench of the Small Causes Court is concerned, the said amount would also have to be considered in the context of the licence fees and the interest free
deposits which the Petitioners are getting from the licensee who are in occupation of various sheds
in the suit premises. This is in view of the fact that by the judgments of the Apex Court it is well
settled that the decree holder is required to be compensated for the loss caused to him on account of
the decree being stayed.
If the said principle is applied, then the amount fixed at Rs.10,00,000/- per month cannot be said to
be excessive, exorbitant or fanciful, as has been observed by the Apex Court in the case of Supermax
International Pvt Ltd. (Supra). In my view therefore, no interference is called for with the quantum
fixed by the Appellate Bench of the Small Causes Court. 14 In so far as the undertaking to be
furnished by the Petitioners as directed by the operative part of the impugned order is concerned, in
my view, the Petitioners cannot have any grievance about the said undertaking in so far as clauses (i)
to (iii) as the said undertaking has been directed to be furnished so as to protect the interest of the
decree holders i.e. the Respondents, as in the event the decree is confirmed by the Appellate Bench
of the Small Causes Court, the Respondents would be entitled to the possession of the land
alongwith structures / sheds thereon. However, to balance the equities between the parties as the
interim compensation to be deposited by the Petitioners is Rs.10,00,000/-, clauses (iv) and (v) are
required to be modified.
In so far as clause (iv) is concerned, the said clause is amended to the following effect. "the
Appellants would not create any third party rights in respect of the suit land and structures standing
thereon save and except by way of leave and licence agreements in respect of which they would place
the same on record of the Appellate Bench of the Small Causes Court as also inform the licensees of
the pending Appeal and that their continuance in occupation would be subject to the result of the
In so far as clause (v) is concerned, instead of the Appellants seeking leave of the court prior to
entering into any sort of fresh transaction with the existing licensee of the structures, the said clause
is substituted by the following clause. " The Appellants to inform the Appellate Bench of the Small
Causes Court of any new transaction entered into with the existing licensee of the structures and
also put the licensee to notice of the pending Appeal". However the same would be subject to clause
(iv) as above. The Appellants to filed the undertaking latest by 6-6-2017.
It is made clear that clauses (iv) and (v) as above would be without prejudice to the rights and
contentions of the parties in the Appeal. 15 Hence save and except to the extent as above, this Court
does not deem it appropriate to interfere with the impugned order. The Writ Petition is accordingly
dismissed. Rule discharged with parties to bear their respective costs of the Petition.
At this stage the Learned Counsel for the parties make a joint
request for the expeditious hearing of the Appeal. Considering that the Suit is of the year 1973, the
hearing of the Appeal is expedited.;