Supreme Court clarifies conditions for stay on eviction orders during appeals: State of Maharashtra vs. M/s. Super Max International Pvt. Ltd. (27 August 2009)

Date of the Judgment: 27 August 2009
Citation: Where available, provide the case citation in the Indian Supreme Court (INSC) format.
Judges: B.N. Agrawal, G.S. Singhvi, Aftab Alam
Can a High Court impose conditions, such as requiring a tenant to pay an amount exceeding the contractual rent, for staying an eviction order during the pendency of an appeal? The Supreme Court of India addressed this question in a case involving the State of Maharashtra and M/s. Super Max International Pvt. Ltd. The court clarified the powers of appellate courts to impose such conditions, balancing the interests of landlords and tenants. The judgment was delivered by a bench comprising Justices B.N. Agrawal, G.S. Singhvi, and Aftab Alam.

Case Background

The State of Maharashtra occupied premises of approximately 9000 sq. ft. in Mumbai, owned by M/s. Super Max International Pvt. Ltd. and others, for use as the office of the Registrar Co-operative Societies. The state had been occupying the premises since 1966, initially under a lease from the Maharaja of Travancore.

On May 5, 1982, Respondents 1 to 3, M/s. Super Max International Pvt. Ltd. and others, purchased the building and became the landlords.

The landlords filed a suit for eviction, and on June 30, 2003, the Court of Small Causes passed a decree of ejectment against the State of Maharashtra on the grounds of:

• Default in payment of taxes and water charges under Section 13(3)(a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (“the Bombay Rent Act”).
• Reasonable and bona fide need of the landlords for their own use and occupation under Section 13(1)(g) of the Bombay Rent Act.

The State of Maharashtra’s appeal against this decree was dismissed on April 28, 2005, by the Division Bench of the Small Causes Court.

Timeline

Course of Proceedings

Initially, the State of Maharashtra filed a writ petition [W.P. (C) No.7361 of 2005] in the Bombay High Court, challenging the orders of ejectment. However, the High Court declined to entertain the writ petition, citing the availability of a remedy under Section 35F(2) of the Bombay Rent Act. The High Court disposed of the writ petition on March 15, 2007, allowing the state to file a civil revision application.

Subsequently, the State of Maharashtra filed Civil Revision Application No.78 of 2007 in the High Court, challenging the ejectment orders. The High Court admitted the Civil Revision on December 10, 2007, and issued a rule on interim relief regarding the stay of execution of the decree.

On October 14, 2008, the High Court stayed the execution of the decree, subject to the condition that the State of Maharashtra deposit Rs. 5,40,000/- every month, commencing from the date of the trial court’s decree. The court directed that arrears be deposited by January 10, 2009, and future deposits be made by the tenth of each succeeding month. The deposits were to be ad-hoc and subject to further orders, with the amounts invested in a nationalized bank. The State of Maharashtra found this condition onerous, while the landlords argued that the deposit was less than the prevailing market rent.

Legal Framework

The case revolves around the interpretation and application of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. Key sections include:

• Section 13(3)(a): This section deals with the grounds for eviction related to default in payment of taxes and water charges. The judgment notes that the eviction decree was partly based on the appellant’s failure to comply with this provision.
• Section 13(1)(g): This section pertains to eviction based on the landlord’s reasonable and bona fide need for the premises. The eviction decree was also based on this ground.
• Section 35F(2): This section provides for civil revision applications to the High Court, which the appellant initially sought after the dismissal of their writ petition.
• Section 5(11): Defines “tenant” under the Bombay Rent Act. “5(11). “tenant” means any person by whom or on whose account rent is payable for any premises and includes,- (a)such sub-tenants and other persons as have derived title under a tenant before the 1st day of February 1973; (aa) any person to whom interest in premises, has been assigned or transferred as permitted or deemed to be permitted, under section 15; (b)any person remaining after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title before the first day of February 1973; (bb) such licensees as share deemed to be tenants for the purposes of this Act by Section 15A (bba) the State Government, or as the case may be, the Government allottee, referred to in sub-clause (b) of clause (1A), deemed to be a tenant, for the purposes of this Act by Section 15B; (c) (i) in relation to any premises let for residence, when the tenant dies, whether the death has occurred before or after the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1978, any member of the tenant’s family residing with the tenant at the time of his death or, in the absence of such member, any heir of the deceased tenant, as may be decided in default of agreement by the Court; (ii) in relation to any permission let for the purposes of education, business, trade or storage, when the tenant dies, whether the death as occurred before or after the commencement of the said Act, any member of the tenant’s family using the premises for the purposes of education of carrying on business, trade or storage in the premises, with the tenant at the time of his death, or, in the absence of such member, any heir of the deceased tenant, as may be decided in default of agreement by the court. Explanation – The provisions of this clause for transmission of tenancy, shall not be restricted to the death of the original tenant, but shall apply, and shall be deemed always to have applied, even on the death of any subsequent tenant, who becomes tenant under these provisions on the death of the last preceding tenant.”
• Section 5(10): Defines “standard rent” under the Act. “5(10). “standard rent” in relation to any premises means,- (a) where the standard rent is fixed by the Court and the Controller respectively under the Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944, such standard rent; or (b) when the standard rent is not so fixed,- subject to the provisions of section 11, (i) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iii-a) notwithstanding anything contained in paragraph (iii), the rent of the premises referred to in sub-section (1-A) of section 4 shall, on expiry of the period of five years mentioned in that sub-section, not exceed the amount equivalent to the amount of net return of fifteen percent, on the investment in the land and building and all the outgoings in respect of such premises; or (iv) on any of the cases specified in section 11, the rent fixed by the Court.”
• Section 7: Bars any increment of rent except in circumstances provided under sections 10, 10A, 10B, and 11 of the Act.
• Section 10: Increase in rent on account of payment of rates, etc.
• Section 10A: Increase in rent in respect of premises that were let out on or before September 1, 1940.
• Section 10B: Saving increase in rent under the previous provisions from the bar of Section 7.
• Section 11: Increase in rent resulting from ‘standard rent’ fixed by the court in certain cases.

The Bombay Rent Act, enacted in 1947, aimed to regulate the relationship between landlords and tenants, addressing issues such as rent control and eviction. The Act provides specific protections to tenants, considering the socio-economic conditions prevalent at the time of its enactment.

Arguments

Arguments by the Appellant (State of Maharashtra):

• The appellant argued that the decision in Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd., (2005) 1 SCC 705, should only apply to cases under the Delhi Rent Control Act and not to tenancies governed by the Bombay Rent Act.
• The appellant contended that the Delhi Rent Control Act defines ‘tenant’ in a way that excludes a person against whom a decree of eviction has been passed, while the Bombay Rent Act does not have such an exclusionary clause.
• The appellant submitted that under Section 5(11) of the Bombay Rent Act, the state continued to be a tenant within the meaning of the Act, notwithstanding the decrees of ejectment passed by the Small Causes Court. Therefore, the appellant enjoyed all protections under the Act, and any direction to pay an amount in excess of the standard rent was contrary to law and unsustainable.
• The appellant relied on several decisions to support the contention that the tenancy did not end on the passing of the decree but continued as long as the appellant was in actual physical possession of the suit premises.

Arguments by the Respondents (M/s. Super Max International Pvt. Ltd.):

• The respondents argued that the Maharashtra Rent Control Act, 1999, merely brought about cosmetic changes and retained the substance of the earlier Bombay Rent Act.
• The respondents contended that the issue of reasonableness of the provisions of the Maharashtra Rent Control Act, 1999, or the Bombay Rent Act should be seriously examined by the Court in an appropriate case.
• The respondents maintained that the amount of monthly deposit fixed by the High Court was far less than the current market rent in that area.

Issues Framed by the Supreme Court

1. Whether the High Court can impose conditions, such as requiring a tenant to pay an amount exceeding the contractual rent, for staying an eviction order during the pendency of an appeal or revision under the Rent Act.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd, (2005) 1 SCC 705: The Court viewed this authority as directly applicable to the issue at hand, emphasizing that the High Court has the power to impose conditions for staying eviction orders, including directing payment of monthly rent at a rate higher than the contractual rent.

✓ Niyas Ahmad Khan vs. Mahmood Rahmat Ullah Khan, (2008) 7 SCC 539: The Court clarified that there was no conflict between this case and Atma Ram Properties, and the decision in Niyas Ahmad Khan had no application to the facts of the present case.

✓ Malpe Vishwanath Acharya & Ors. vs. State of Maharashtra & Anr., (1998) 2 SCC 1: The Court referred to this case to highlight the earlier finding that the provisions of the Bombay Rent Act relating to the determination of ‘standard rent’ could no longer be considered reasonable.

✓ Damadilal & Ors. vs. Parashram & Ors., (1976) 4 SCC 855: The Court found that the appellant could not derive any support from this decision, as it was rendered in a different context and under a different statute.

✓ Ganpat Ladha vs. Shashi Kant Vishnu Shinde, (1978) 2 SCC 573: The Court explicitly stated that the view expressed in this case did not lay down the correct law, as it was overruled by Gian Devi Anand.

✓ Gian Devi Anand vs. Jeevan Kumar, (1985) 2 SCC 683: While the Court considered this Constitution Bench decision, it found it distinguishable in the present context, particularly concerning the rights of heirs of deceased tenants.

✓ Mani Subrat Jain vs. Raja Ram Vohra, (1980) 1 SCC 1 and H. Shiva Rao vs. Cecilia Pereira (1987) 1 SCC 258: The Court distinguished these cases, noting that in those cases, the tenanted premises came under the Rent Act, and the tenant had not suffered any decree under the respective Rent Acts.

✓ Satyawati Sharma vs. Union of India & Anr., (2008) 5 SCC 287: The Court reaffirmed the views expressed in this case, emphasizing the need for a more balanced and objective approach to the relationship between landlord and tenant.

What weighed in the mind of the Court?

The Supreme Court’s decision in State of Maharashtra vs. M/s. Super Max International Pvt. Ltd. was influenced by several factors, including the need to balance the interests of landlords and tenants, the changing socio-economic landscape, and the interpretation of relevant legal provisions. The Court emphasized that while the Rent Act was initially enacted to protect tenants, there is a need for a more balanced approach in contemporary times.

Fact:Law

Logical Reasoning

ISSUE: Can the High Court impose conditions for staying an eviction order?

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Consideration of Bombay Rent Act and relevant provisions

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Analysis of precedents, especially Atma Ram Properties

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Balancing the interests of landlords and tenants

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Decision: Yes, the High Court can impose conditions, provided they are reasonable and not excessive.

Key Takeaways

• Appellate and revisional courts have the power to impose conditions for staying eviction orders under the Rent Act.
• Conditions can include directing the tenant to pay monthly rent at a rate higher than the contractual rent, provided the amount is reasonable.
• The decision reflects a shift towards a more balanced approach in landlord-tenant relationships, considering contemporary socio-economic conditions.

Directions

The Court directed that the amount fixed by the High Court, over and above the contractual monthly rent, should ordinarily not be paid to the landlord during the pendency of the appeal/revision. The deposited amount, along with accrued interest, should only be paid after the final disposal to either side depending upon the result of the case.

Development of Law

The ratio decidendi of the case is that appellate and revisional courts have the authority to impose reasonable conditions, including higher rent payments, for staying eviction orders under Rent Acts. This clarifies the scope of judicial discretion in balancing the interests of landlords and tenants during appeal processes.

Conclusion

In State of Maharashtra vs. M/s. Super Max International Pvt. Ltd., the Supreme Court upheld the High Court’s order, clarifying that appellate courts can impose conditions, including higher rent payments, for staying eviction orders. The decision emphasizes the need for a balanced approach in landlord-tenant relationships and clarifies the scope of judicial discretion in such matters. The appeal was dismissed with costs.