05 Nov 2020

Stay of a secured judgement and decree cannot be ordered unconditionally - Bombay High Court

Case : Vijay Anant Gangan v. Zenabibi Gulam Rasool & Ors Civil Revision Application No.357 of 2017

Court : Bombay High Court

Bench : Justice S. C. Gupte

Decided on : 05 Nov 2020

Relevant Statutes

Sections 13(1)(e) and 13(1)(k) of the Bombay Rents, Hotel & Lodging House Rates Control Act, 1947

Brief Facts and Procedural History

1. A lease deed dated 16th August 1949 was executed by Abubaker Gulam Rasool Jerullah (original lessor) in favour of Chunilal Ukabhai Padia (original lessee) for 30 years with permission to the lessee to construct on the land and own such construction.

2. On or about 22nd January 1968, the legal heirs of the original lessor entered into a supplementary indenture of lease permitting the original lessee to demolish the old structures standing on the property and erect new structures for 98 years commencing from 1st February 1968, with an option of renewal for a further period of 10 years.

3. On or about 1st April 1987, the original lessee died. He had executed a last will and testament creating inter alia a charitable trust and appointing the Applicant and one Amritlal Gordhandas Jajal as executors and trustees.

4. In or about 1988, one Zenabibi Gulam Rasool Jarullah and others, claiming to be legal heirs of the original lessor, filed the present ejection suit and claimed that the Applicant and Amritlal (passed away while the suit was pending) had no right to the tenancy of the suit property and were in wrongful use, occupation and possession of the same. On 25th June 2004, the trial court passed the decree of dismissal in an eviction suit.

5. On 4th May 2017, the appellate bench of the Court of Small Causes at Mumbai reversed the decree of dismissal and decreed the suit by ordering the eviction of the Applicant. Appellate Court held that the lease deed of 24th January 1968 did not permit the lessee to transfer the leasehold rights in any manner; and the bequest of tenancy rights by the lessee in favour of the Applicant and another would amount to a transfer prohibited by Section 13(1)(e) of Bombay Rents, Hotel & Lodging House Rates Control Act, 1947.  Besides, on and from the death of the original tenant, the suit property had not been used by the legal heirs of the tenant for the purpose for which it was let out and such non-user had continued throughout the six months prior to the date of filing of the suit. The court did not accept the use of the suit property by the transferees (i.e. Applicant) as a user within the meaning of Section 13(1)(k) of the said Act.

6. The applicant challenged this judgment and decree by a Civil Revision Application.

The Issues of the Case

Whether applicant entitled to an ad-interim stay of the decree of eviction passed by the Appellate Bench of the Court of Small Causes at Mumbai?

Whether the respondents are entitled to interim compensation?

The Observations of the Court

1. Since the respondents have already succeeded in their suit and secured a decree of eviction, the stay of such decree pending the Civil Revision Application cannot be ordered unconditionally. There must be the judicious balancing of equities which calls for the deposit of interim compensation by the judgment debtor, though it need not be made over to the owners of the suit property but retained in court and invested so that it is available to such of the parties as may be found entitled to it at the hearing of the Civil Revision Application.

2. The only legitimate basis for working out interim compensation appears to be the actual price paid for the suit property (i.e. essentially the land) by Respondent No.19. Respondent No.19 has acquired the reversionary right of the lessors in the suit property for a sum of ₹5.50 crore.

3. The multipliers in Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd., (2005) 1 SCC 705 and Previn Govind Sharma v. Dinyar Jal Jamshedj, CRA (St.) No.33250 of 2018, decided on 21 June 2019 are not benchmarks to be used as precedents for fixing compensation generally.

4. As observed in Previn Govind Sharma v. Dinyar Jal Jamshedj, CRA (St.) No. 33250 of 2018, decided on 21 June 2019, there is bound to be some kind of ad-hocism, some guesswork in the matter of fixing such compensation. It is just that for a stay of a decree, the judgement-debtor must subject himself to reasonable terms, which may well include payment of fair compensation for preventing his eviction from the suit property which is what the decree requires; and this compensation must have some nexus with the resultant loss of fruits of the decree suffered by the decree-holder.

5. In the present case, by estimating return at 6.5% per annum on the price paid by Respondent No.19, ₹2,56,654/- per month may be termed as a fair return on investment, which the party eventually successful may be said to have lost as a result of the stay on eviction and which may be taken as reasonable compensation to be fixed during the pendency of the Civil Revision Application as a condition of the stay. At best, it is rounded off to ₹2,50,000/- per month.

The Decision Held by the Court

1. The Honourable Bombay High Court confirmed the ad-interim stay of the decree of eviction passed by the Appellate Bench of the Court of Small Causes at Mumbai.

2. The reasonable monthly compensation as a condition of stay is fixed at ₹2,50,000/-. The Applicant shall furnish security for the arrears of compensation payable from 2 April 2018 till date in the sum of ₹77.50 lakh by the deposit of a fixed deposit receipt of like amount endorsed in favour of the Registrar General of this Court with intimation to the issuing bank. Such deposit shall be made on or before 10 December 2020.

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