A single judge bench of Justice Sandeep V. Marne further noted that the Court of Appeal has jurisdiction to direct the licensee to deposit such compensation or fair market rent as may be determined by him as a condition for grant of stay or eviction under Order 41, Rule 5 of the CPC.

Background

The petitioner/defendant and respondents/plaintiffs have executed a ‘Leave and License Agreement’, under which the respondents have granted license to the petitioner for a period of 60 months, from September 25, 2006 to September 24, 2011, on payment of license fee of Rs.3 lakh per month. Clause 28 of the license agreement provided for the payment of damages equal to double the license fees in the event that the licensee failed to return possession of the premises as provided for in the agreement.

When a dispute arose over the payment of fees in 2009, the respondents sought to terminate the licensing agreement and filed suit in the Small Causes Court. The Small Causes Court directed the petitioner to transfer possession of the suit premises to the respondents and pay compensation of Rs.6 lakh per month (on account of clause 28 of the license agreement) from May 1, 2009 till the suit premises holiday .

In an appeal filed by the petitioner, the Appellate Bench of Small Causes Court stayed the execution of the eviction decree on condition that the petitioner deposits the entire decree amount of Rs.6 lakh per month from the date of termination of permit till the date of termination of the permit. date of the decision. Further, in respect of the post-decree period, the Appellate Court undertook the determination of ‘market rent’ of the warehouse and directed the petitioner to pay an amount of Rs.17.95 lakh per month from the date of the decree to the decision in the appeal. .

The petitioner argued that the Court of Appeal could not have ordered him to deposit the interim compensation while the appeal was still pending, as the license fees and damages were contractually agreed between the parties. It was argued that it is impermissible to fix the market rent as interim compensation as a condition for a suspension of the eviction decision in relation to a permit.

Deposit of a decretal amount as a condition for residence in the event of deportation

The Supreme Court referred to Order 41 Rule 5 of the CPC, which states that an appeal shall not operate as a stay of any decree or order.

Here, the Court observed that the Trial Court, in addition to the eviction order, had also issued a ‘money decree’ against the petitioner, pursuant to which it had to pay a monthly amount of Rs. 6 lakh to the respondent.

The Court stated that, having regard to Order 41, Rule 5 of the CPC, the Court of Appeal was justified in imposing a deposit of a decree sum as a condition for the grant of stay under this provision.

“This is a case where the Court of Appeal had exercised power under Order 41 Rule 5 by ordering the deposit of decree amount of Rs. 6,00,000/- per month from May 1, 2009 to December 17, 2022. Once there is a decree of the Trial Court fixing the pecuniary liability of the defendant up to the date of the decree, the Appellate Court cannot vary the same as long as the appeal is pending. by way of interim relief” said the Court.

Deposit of an amount higher than the contractual rent during the pending appeal

The Court observed that the principle laid down by the Supreme Court in the case of Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd. (2005), must be applied with full force in this case. In this case, the Supreme Court had established that once the possession of a tenant/tenant becomes unlawful, the tenant/tenant is liable to pay damages for the continued use and occupancy of the property for the period thereafter, at the rate rate that the landlord could have rented. the property if there had been no tenant.

Even Atma Ram was governed by rent control legislation, the Supreme Court noted that this principle could also be applied to a licensing agreement. This would ensure that the licensor receives reasonable compensation and that the licensee does not abuse the time required to decide the appeal by occupying the premises at a lower than market price.

The Supreme Court further referred to another judgment of the Supreme Court in State of Maharashtra & anr. vs. Supermax International Private Limitedwhere it was noted that a Court of Appeal could order payment of monthly rent at a rate higher than the contractual rent during the pendency of an appeal.

The Court thus rejected the petitioner’s contention that only a contractual amount of damages can be paid while the appeal is pending.

Furthermore, the Court noted that the warehouse was located in Mumbai: “Judicial notice must be taken of the fact that the average rent in Mumbai City has increased exponentially after the year 2011 when the original license period came to an end.” The Court noted that the plaintiff cannot suffer further losses by ordering the payment of the amount agreed upon by the parties in 2006, as there was a huge difference between the contractual amount of damages and the market value. rental price determined by the court.

It stated “In the present case, as the market rent appears to be substantially higher than the damages amount representing double the license fees, denying the market rent during the pendency of the appeal would place the licensor at a disadvantage.”

The Court therefore confirmed the judgment of the Court. However, it has changed the amount of interim compensation from Rs. 17.95 lakh to Rs. 11.51 lakh, to be deposited by the petitioner from the date of decision until disposal of the appeal.