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Tuesday, November 12, 2013

The Lease Agreement is not registered - there is clear understanding about rate of rent and terms and conditions of lease between the parties evidencing correspondences - suit for recover of rent is maintainable - pending case, Bank vacated some portion of building - Bank directed to hand over the possession with out any suit for recovery = GULAB CHAND BHORA & ORS. ... APPELLANT (S) VERSUS PUNJAB NATIONAL BANK & ANR. ... RESPONDENT (S) = Published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40957

  The Lease Agreement is not registered - there is clear understanding about rate of rent and terms and conditions of lease between the parties evidencing correspondences - suit for recover of rent is maintainable - pending case, Bank vacated some portion of building - Bank directed to hand over the possession with out any suit for recovery =
The appellants-plaintiffs are the owners of the  premises  which  were
let out to the respondent-bank.  
The  aforesaid  tenancy  was  on  the  basis  of  an  unregistered
agreement between the parties effective from 01.06.1978 for a  period  of  6 years with the option of continuance of the tenancy for a further period  of 5 years.  
The monthly rent was agreed between the parties at Rs.2200/-.   
By
mutual agreement, the tenancy continued on expiry of  the  initial  5  years
thereof until 30.06.1989.   
 Thereafter,  the
regional building committee of the bank in its meeting  held  on  05.07.1993
also recommended renewal of the lease agreement  at  the  enhanced  rent  of
Rs.2/- per square feet for a period of 5 years with effect from the date  of
expiry of the earlier agreement i.e.  01.07.1989  and,  thereafter,  further
enhancement of rent at the rate of 45% for an additional period of 5  years.
  The aforesaid  recommendation  of  the  regional  building  committee  was
signed by the Manager (GAD), Senior Manager as well as the Regional  Manager
of the defendant-bank.

5.     It  appears  that  notwithstanding  the  above,  the   defendant-bank
continued to occupy the premises on payment of rent at the old  rate.   
This
led the appellants to institute Money Suit No.143 of 1994 claiming a  decree
of Rs.9,46,892.50/- being the balance of the arrears of rent  calculated  at
the rate of Rs.2/- per  square  feet  for  the  period  from  01.07.1989  to
30.06.1994 and, thereafter, for the period from 01.07.1994 upto the  end  of
the month of November, 1994 (suit was filed on 23.11.1994) at  the  rate  of
Rs.2.90/- per square feet.  
Along with the aforesaid amount, the appellants-
plaintiffs had also prayed for grant of interest at  the  rate  of  12%  per
annum. =
The demand raised by the appellants-plaintiffs for enhanced  rent  and acceptance thereof by the bank authorities as  evident  from  the  documents
dated 12.11.1990 and 05.07.1993, in our considered view,  reflects  a  clear understanding between the parties that the tenancy agreement would  continue at an  enhanced  rent  of  Rs.2/-  per  square  feet  for  the  period  from 01.07.1989 to 30.06.1994 and thereafter at further enhanced rent of 45%  for the next 5 years.  
Abundant materials had been  brought  on  record  by  the
appellants-plaintiffs to show that the  claim  for  enhanced  rent  for  the
premises and the understanding reached was in tune with or  even  less  than
the prevailing market rate of rent in respect of similar premises.  
If  the
above is the basis on which the Trial Court had thought  it  fit  to  decree the suit of the appellants-plaintiffs we do not see how the High  Court  can be found to be justified in reversing the  said  decree  and  requiring  the appellants-plaintiffs to move the Rent Controller for fixing the  fair  rent of the premises.  
The exercise directed by the High  Court  was,  therefore,
wholly unnecessary besides being inequitable and litigious.  It should  have
been best avoided. 
We, therefore,  consider  it  proper  to  set  aside  the
judgment dated 08.02.2008 and the decree  dated  28.01.2008  passed  by  the
High Court of Calcutta and  restore  the  decree  dated  11.02.1999  of  the
learned Trial Court. 
The appellants-plaintiffs would now be entitled to  the
amount decreed by the learned Trial Court and  also  rent  at  the  enhanced
rate of Rs.2.90/- with effect from 01.07.1999  till  the  present  date  and
until mutually altered.  
In so far as the claim of  interest  is  concerned,
in the peculiar facts of the case, we decline the same.

12.   Before parting, we would like to observe that  during  the  course  of
hearing of the appeals it became known that the bank has no further need  to
retain the second  floor  of  the  tenanted  premises  in  view  of  certain
subsequent facts and events  that  have  occurred  during  the  pendency  of
present appeals.  
In the above situation we do not consider it necessary  to
require the appellants-plaintiffs to approach  the  court,  once  again,  to
recover possession of the second floor of the tenanted  premises  which  the
bank admittedly is ready and willing to surrender.   
We,  therefore,  direct
the respondent-bank to act accordingly in so far as the second floor of  the
tenanted premises is concerned within a period  of  three  months  from  the
date of receipt of this order.

13.   With the above observations, both the appeals shall stand disposed  of
in the manner indicated above.



                                                           NON-REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                     CIVIL APPEAL NOS. 9677-9678 OF 2011


GULAB CHAND BHORA & ORS.          ...   APPELLANT (S)

                                   VERSUS

PUNJAB NATIONAL BANK & ANR.  ...  RESPONDENT (S)



                               J U D G M E N T

RANJAN GOGOI, J.

1.    Delay in filing the application for substitution is condoned.

2.    Application for substitution is allowed.

3.    Aggrieved by the reversal of the decree passed in their favour by  the
learned Trial Court and the dismissal of  the  cross  objection  filed,  the
plaintiffs have filed the present appeals.

4.    The appellants-plaintiffs are the owners of the  premises  which  were
let out to the respondent-bank.  
The area of the tenanted premises  measures
7565 square feet located  on  the  ground,  first  and  second  floor  of  a
building situated in Ward No.13 of Kharagpur  Town  in  the  State  of  West
Bengal.  
The  aforesaid  tenancy  was  on  the  basis  of  an  unregistered
agreement between the parties effective from 01.06.1978 for a  period  of  6 years with the option of continuance of the tenancy for a further period  of 5 years.
The monthly rent was agreed between the parties at Rs.2200/-.  
By
mutual agreement, the tenancy continued on expiry of  the  initial  5  years
thereof until 30.06.1989.   
Thereafter,  the  appellants-plaintiffs  claimed
enhanced rent at the rate of Rs.3/- per square feet.  It  appears  that  the
Senior Manager of the defendant Bank and the plaintiffs arrived at a  mutual
settlement for enhancement of the rent to Rs.2/- per square feet.  This  was
on 12.11.1990.
However, the higher  authority  in  the  Bank  disowned  the
authority of the Senior Manager to take such a  decision.  
Thereafter,  the
regional building committee of the bank in its meeting  held  on  05.07.1993
also recommended renewal of the lease agreement  at  the  enhanced  rent  of
Rs.2/- per square feet for a period of 5 years with effect from the date  of
expiry of the earlier agreement i.e.  01.07.1989  and,  thereafter,  further
enhancement of rent at the rate of 45% for an additional period of 5  years.
  The aforesaid  recommendation  of  the  regional  building  committee  was
signed by the Manager (GAD), Senior Manager as well as the Regional  Manager
of the defendant-bank.

5.     It  appears  that  notwithstanding  the  above,  the   defendant-bank
continued to occupy the premises on payment of rent at the old  rate.   
This
led the appellants to institute Money Suit No.143 of 1994 claiming a  decree
of Rs.9,46,892.50/- being the balance of the arrears of rent  calculated  at
the rate of Rs.2/- per  square  feet  for  the  period  from  01.07.1989  to
30.06.1994 and, thereafter, for the period from 01.07.1994 upto the  end  of
the month of November, 1994 (suit was filed on 23.11.1994) at  the  rate  of
Rs.2.90/- per square feet.  
Along with the aforesaid amount, the appellants-
plaintiffs had also prayed for grant of interest at  the  rate  of  12%  per
annum.

6.    The claim in the suit was resisted by  the  defendant-bank  contending
that there was no fresh agreement between  the  parties  on  expiry  of  the
earlier tenancy on 30.06.1989.
According to the defendants, the demand  for
enhanced rate  raised  by  the  appellants-plaintiffs;  the  decision  dated 12.11.1990 and the recommendations of the regional building committee  dated 05.07.1993 did not give rise to any concluded agreement between the  parties in order to entitle the appellants-plaintiffs to the reliefs claimed in  the
suit.

7.    The learned Trial Court, 
after noticing the respective  stand  of  the
parties;
 the evidence brought on record and after specifically  taking  note
of the stand taken before it on behalf of the defendant-bank that  the  bank
was ready to pay the rent as per the  recommendations  dated  05.07.1993  of
the regional building committee, by its judgment  dated  11.02.1999  thought
it fit to decree the suit for enhanced  rent  at  the  rate  of  Rs.2/-  per
square feet for the period from 01.07.1989 to 30.06.1994 and further at  the
rate of Rs.2.90/- from 01.07.1994 to 30.06.1999. 
 However, for  the  reasons
assigned by the learned Trial Court, the claim  of  interest  was  declined.
It may be specifically noticed that the learned Trial Court while  decreeing
the suit as aforesaid took into account the recommendation of  the  regional
building committee which document was duly exhibited in the suit (Exbt.20).

8.    Aggrieved by the decree of the learned Trial  Court  dated  11.02.1999
the Bank filed an appeal before the High Court.   
In  the  said  appeal  the
appellants filed their cross-objections as against the refusal of  interest.
 The High Court by its impugned judgment and  decree  dated  08.02.2008  and 28.01.2008 respectively set aside the decree passed  by  the  learned  Trial Court leaving  it  open  to  the  appellants-plaintiffs  to  move  the  Rent Controller  for  fixation  of  fair  rent  for  the  premises  in  question.
Consequently, the cross-objection filed by  the  appellants  was  dismissed.
In doing so, the High Court came to the conclusion  that  
as  there  was  no concluded contract between the parties  with  regard  to  enhanced  rent  on expiry of the period of the lease, it is only the Rent Controller under  the Tenancy Act who could have determined the fair rent of  the  premises.  
The
High Court, therefore, left it open to the appellants-plaintiffs to move  to the Rent Controller.  
Aggrieved by the  aforesaid  reversal  of  the  decree
passed in their  favour  and  the  dismissal  of  the  cross-objection,  the
present appeals have been filed.

9.    We have heard learned counsel for both the parties.

10.    From the several documents exhibited in the suit by  the  appellants-
plaintiffs, it  is  clear  that  prior  to  the  expiry  of  the  lease  the
appellants-plaintiffs had given notice(s) for continuance of the tenancy  at
the enhanced rate(s) claimed therein.  
The rent,  as  claimed,  was  on  the
basis of the  rent  prevailing  in  the  locality  where  the  premises  was
located.  
Of particular significance would be the  minutes  of  the  meeting
held between the Senior Manager of the bank  and  the  appellants-plaintiffs
on 12.11.1990 wherein the rent of premises was agreed at the rate of  Rs.2/-
per square feet with effect from 01.07.1989.  
Though  the  Bank  appears  to
have denied the authority of the Senior Manager to sign  the  said  minutes,
as already noticed, the regional building  committee  of  the  Bank  in  its
meeting held on 05.07.1993 had, once again, favoured renewal of the  tenancy
at the rate of Rs.2/- per square feet for the initial period of 5 years  and
thereafter at an enhanced rate of 45% for an additional period of  5  years.

The aforesaid admitted documents proved in the course of trial of suit  were
relied upon by the learned Trial Court to  come  to  the  finding  that  the
appellants-plaintiffs were  entitled  to  enhanced  rent  in  terms  of  the
recommendation  of  the  regional  building  committee   dated   05.07.1993.
Accordingly, the suit was decreed, however, without any interest.

11.   The demand raised by the appellants-plaintiffs for enhanced  rent  and acceptance thereof by the bank authorities as  evident  from  the  documents
dated 12.11.1990 and 05.07.1993, in our considered view,  reflects  a  clear understanding between the parties that the tenancy agreement would  continue at an  enhanced  rent  of  Rs.2/-  per  square  feet  for  the  period  from 01.07.1989 to 30.06.1994 and thereafter at further enhanced rent of 45%  for the next 5 years.  
Abundant materials had been  brought  on  record  by  the
appellants-plaintiffs to show that the  claim  for  enhanced  rent  for  the
premises and the understanding reached was in tune with or  even  less  than
the prevailing market rate of rent in respect of similar premises.
 If  the
above is the basis on which the Trial Court had thought  it  fit  to  decree the suit of the appellants-plaintiffs we do not see how the High  Court  can be found to be justified in reversing the  said  decree  and  requiring  the appellants-plaintiffs to move the Rent Controller for fixing the  fair  rent of the premises.  
The exercise directed by the High  Court  was,  therefore,
wholly unnecessary besides being inequitable and litigious.  It should  have
been best avoided. 
We, therefore,  consider  it  proper  to  set  aside  the
judgment dated 08.02.2008 and the decree  dated  28.01.2008  passed  by  the
High Court of Calcutta and  restore  the  decree  dated  11.02.1999  of  the
learned Trial Court. 
The appellants-plaintiffs would now be entitled to  the
amount decreed by the learned Trial Court and  also  rent  at  the  enhanced
rate of Rs.2.90/- with effect from 01.07.1999  till  the  present  date  and
until mutually altered.  
In so far as the claim of  interest  is  concerned,
in the peculiar facts of the case, we decline the same.

12.   Before parting, we would like to observe that  during  the  course  of
hearing of the appeals it became known that the bank has no further need  to
retain the second  floor  of  the  tenanted  premises  in  view  of  certain
subsequent facts and events  that  have  occurred  during  the  pendency  of
present appeals.  
In the above situation we do not consider it necessary  to
require the appellants-plaintiffs to approach  the  court,  once  again,  to
recover possession of the second floor of the tenanted  premises  which  the
bank admittedly is ready and willing to surrender.   
We,  therefore,  direct
the respondent-bank to act accordingly in so far as the second floor of  the
tenanted premises is concerned within a period  of  three  months  from  the
date of receipt of this order.

13.   With the above observations, both the appeals shall stand disposed  of
in the manner indicated above.


                                                           …………..………………………J.
                                                  [H.L. GOKHALE]




                                                           …………..………………………J.
                                                  [RANJAN GOGOI]

NEW DELHI
NOVEMBER 11, 2013.

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