Holding

The Tribunal correctly exercised its discretionary power to stay the eviction and impose a reasonable additional deposit, and tenancy terminates on the eviction decree date, unaffected by the doctrine of merger.

Summary

The landlord, Mis. Atma Ram Properties (P) Ltd., filed an eviction suit under the Delhi Rent Control Act alleging illegal sub‑letting by the tenant, Mis. Federal Motors Pvt. Ltd. The Rent Controller ordered eviction, which the tenant appealed to the Rent Control Tribunal under Section 38. The Tribunal stayed the eviction on the condition that the tenant deposit Rs 15,000 per month, exceeding the contractual rent, with the court. The Delhi High Court set aside that condition, prompting an appeal to the Supreme Court. The Court held that the Tribunal, empowered by Section 38(3) and Order 41 Rule 5 of the CPC, may grant a discretionary stay and impose reasonable conditions such as additional deposits to compensate the landlord. It further clarified that under the Delhi Rent Control Act the tenancy terminates on the date of the eviction decree, not merely on the termination of the contractual lease, and that the doctrine of merger does not postpone this termination. Consequently, the Supreme Court allowed the appeal, restored the Tribunal’s order, and directed the tenant to make the stipulated deposits.

Issues considered

The Rent Control Tribunal’s statutory power to stay an eviction order and impose conditions under Section 38 of the Delhi Rent Control Act and Order 41 Rule 5 of the CPC.
Whether a tenant, during the pendency of an appeal against an eviction decree, is liable to pay only the contractual rent or also compensation/mesne profits to the landlord.
The date of termination of tenancy under the Delhi Rent Control Act and the effect of the doctrine of merger on that termination.

Legislation cited

Code of Civil Procedure, 1908s. Order 41 Rule 5 (sub‑rule 1 and 3)
Delhi Rent Control Act, 1958s. 14(1)(b), s. 2, s. 38
Transfer of Property Act, 1882s. 111

Subjects

evictionrent controlstay of executionappellate jurisdictionmesne profitstenancy terminationdoctrine of mergerdiscretionary powercommercial premises

Judgment

MIS. ATMA RAM PROPERTIES (P) LTD. A
v.
MIS. FEDERAL MOTORS PVT. LTD.

DECEMBER 10, 2004
B
[R.C. LAHOTI, CJ. AND G.P. MATHUR, J.)

Delhi Rent Control Act, 1958; Ss. 14(l)(b) and 38/Code of Civil
Procedure, 1908; Order 41 Rule 5 :

Non-residental/commercial premises-Eviction petition-Eviction C
ordered by Rent Controller-Stayed by Appellate Tribunal directing the
tenant to deposit certain amount in excess of the contractual rent monthly-
Condition set aside by High Court-Correctness of-Held : Power of Rent
Control Tribunal to grant stay is discretionary-Applicant must have shown
sufficient cause before seeking grant of stay-By granting stay, Court/ D
Tribunal postponing the execution of the order for eviction-Hence, could
impose conditions including furnishing security for the due performance
of the final decree/order to provide for compensation to Landlord.

Termination of tenancy-Held: Termination of the proceedings before
the Supervisory Forum/Appellate Court if results in affirming the decree/ E
order of eviction, the tenancy would and terminated with effect from the
date of the decree/order passed by the lower Forum/Court-Date of
termination of tenancy could not be postponed-Doctrine of merger not
attracted.
F
Transfer of Property Act, 1882; Section 111 : Determination of lease
vis-a-vis tenancy-Discussed

Words and Phrases :

'relevant facts '-Meaning of in the context of Rent Control Legislation. G

Appellant-landlord filed an eviction petition against the respond-
ent-tenant on the ground of sub-letting. The suit was decreed by the
Rent Controller. On appeal, the Rent Control Tribunal stayed the
eviction subject to the condition that the respondent should deposit in H
843
A
844 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

the Court as sum of Rs. 15,000 per month in excess of the contractual
rent until the appeal was finally decided by the Court. The order was
-
challenged by the respondent. Single Judge of the High Court set aside
the condition. Hence the present appeal.

B Appellant contended that if an appeal/revision petition against a
decree or order for eviction has been filed by the tenant retaining use
and occupation of the premises, he should be prepared to compensate
the landlord by paying such amount as the landlord would have been
able to earn in the event of the premises being vacated; and that the
superior Court, while passing an order of stay, acts well within its
C discretionary jurisdiction by putting on terms the appellant who seeks
an order of stay.

Respondent submitted that during pendency of the app-eal the
tenant-appellant cannot be directed to pay any amount over and above
D the amount of contractual rent unless and until the decree or order of
eviction has achieved finality since the tenant shall continue to remain
a tenant and would not become a unlawful possession of the property.

Allowing the appeal, the Court

E HELD: I.I. There is no specific provision in the Delhi Rent Control
Act conferring power on the Tribunal to grant stay on the execution of
the order of eviction passed by the Controller, but sub-:Section (3) of
Section 38 of the Act confers the Tribunal with all the powers vested in a
Court under the Code of Civil Procedure, 1908 while hearing an appeal.
F The provision empowers the Tribunal to pass an order of stay by reference
to Rule 5 of Order 41 of the Code of Civil Procedure. (849-B-CJ

1.2. It is well settled that mere preferring of an appeal does not
operate as stay on the decree or order appealed against nor on the
proceedings in the Court below. A prayer for the grant of stay of
G proceedings or on the execution of decree or order appealed against has
to be specifically made to the appellate Court and the Court
has discretion to grant an order of stay or to refuse the same. The only
guiding factor, indicated in Rule 5 of Order 41 CPC is the existence of
sufficient cause in favour of the appellant on the availability of which the
H appellate Court would be inclined to pass an order of stay. [850-B-CJ
ATMA RAM PROPERTIES v. FEDERAL MOTOR 845

1.3. Dispossession, during the pendency of an appeal of a party in A
possession, is generally considered to be 'substantial loss' to the party
applying for stay of execution within the meaning of clause (a) of sub-rule
(3) of Rule 5 of Order 41 of the Code. Clause (c) of the same provision
mandates security for the due performance of the decree or order as may
ultimately be passed being furnished by the applicant for stay as a B
condition precedent to the grant of order of stay. However, this is no the
only condition which the appellate Court can impose. (850-F-G]

1.4. The power to grant stay in discretionary and flows from the
jurisdiction conferred on an appellate Court which is equitable in na:-
ture. To secure an order of stay merely by preferring an appeal is not C
the statutory right conferred on the appellant. So also, an appellate
Court is not ordained to grant an order of stay merely because an appeal
has been preferred and an application for an order of stay has been
made. Therefore, an applicant for order of stay must to equity for
seeking equity. Depending on the facts and circumstances of a given case D
an appellate Court, while passing an order of stay, may put the parties
on such terms on such terms the enforcement whereof would satisfy the
demand for justice of the party found successful at the end of the appeal.
Robust commonsense, common knowledge of human affairs and events
gained by judicial experience and judicially noticeable facts, over and'
above the material available on record - all there provide useful inputs E
as relevant facts for exercise of discretion by the Courts while passing
in order and formulating the terms to put the parties on.
(850-G; 851-A-B; 851-F]

Olga Tellis & Ors. v. Bombay Municipal Corporation & Ors., (1985)
3 sec 545, followed. F

South Eastern Coalfields Ltd. v. State of MP. & Ors., [2003) 8 SCC
648, relied on.

2.1. Under the general law, and in cases where the tenancy is
governed only by the provisions of Transfer of Property Act, 1882, once G
the tenancy comes to an end by determination of leas under Section 111
of the Transfer of Property Act, the right of the tenant to continue in
possession of the premises comes to an end for any period thereafter,

.. for which he continues to occupy the premises, he becomes liable to pay
damages for use and occupation at the rate at which the landlord could H
846 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A have let out the premises on being vacated by the tenant. [852-D-E)

Shyam Sharan v. Sheoji Bhai & Anr., [1977) 4 SCC 393, relied on.

Smt. Chander Kali Bai & Ors. v. Shri Jagdish Singh Thakur & Anr.,
[1977] 4 SCC 402 and Kunhayammed & Ors. v. State of Kera/a & Anr.,
B [2000] 6 SCC 359, Explained and distinguished.

Bhagwandas v. Mst. Kokabai, AIR (1953) Nagpur 186, approved.

Vashu Dea v. Balkishan, [2002] 2 SCC 50, held inapplicable.

c 2.2. The tenant having suffered a decree or order for eviction may
continue his fight before the· superior forum but, on termination of the
proceedings and the decree or order of eviction first passed having been
maintained, the tenancy would stand terminated with effect from the
date of the decree passed by the lower forum. In the case of premises
D governed by rent control legislation, the decree of eviction on being
affirmed, would be determinative of the date of termination of tenancy
and the decree of affirmation passed by the superior forum at any
subsequent stage or date, would not, by reference to the doctrine of
merger have the effect of postponing the date of termination of tenancy.
E [854-H; 855-A-B]

Smt. Chander Kali Bai & Ors. v. Shri Jagdish Singh Thakur & Anr.,
[19771 4 sec 402, referred to.

3. The tenant having suffered an order for eviction must comply
F and vacate the premises. His right of appeal is statutory but his prayer
for grant of stay is dealt with in exercise of equitable discretionary
jurisdiction of the appellate Court. Whi~e ordering stay the appellate
Court has to be alive the fact that it is depriving the successful landlord
of the fruits of the decree and is postponing the execution of the order
G for eviction. There is every justification for the appellate Court to put
the tenant-appellant on terms and direct the appellant to compensate
the landlord by payment of a reasonable amount which is not necessarily
the same as the contractual rate of rent. There is a need to deter tenants
from perpetuating the life of litigation thereby robbing the landlord of
H the fruits of the litigation even if successful. [855-E-F]
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.] 847

Marshall Sons & Co. (!)Ltd. v. Sahi Oretrans (P) Ltd. & Anr., (1999] A
2 sec 325, relied on.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 7988 of
2004.
B
From the Judgment and Order dated 12.2.2002 of the Delh High Court
in C.M. (M) 280 of 2001.

K. Ramamurthi, L.K. Garg, Sriram J. Thalapathy and Balraj Dewan for
the Appellant.
c
Ranjit Kumar, Ms. Anu Mohla and P.D. Gupta for the Respondent.

The Judgment of the Court was delivered by

R.C. LAHOTI, CJ. : Leave granted. D

The suit premises are non-residential commercial premises admeasuring
approximately 1000 sq. ft. and situated in Connaught Circus, New Delhi.
The premises are owned by the appellant and held on tenancy by the
respondent on a monthly rent of Rs.371.90p. per month. The tenancy had
commenced sometime in the year 1944 and it appears that ever since then E
the rent has remained static. Admittedly, the provisions of the Delhi Rent
Control Act 1958, (hereinafter 'the Act', for short) are applicable to the
premises.

Sometime in the year 1992, the appellant initiated proceedings for the F
eviction of the respondent on the ground available under Clause (b) of sub-
section (1) of Section 14 of the Act alleging that the respondent had illegally
sublet the premises to Mis. Jay Vee Trading Co. Pvt. Ltd. and the sub-tenant
was running its showroom in the premises. Vide order dated 19.3.2002, the
Additional Rent Controller, Delhi held the ground for eviction made out and
ordered the respondent to be evicted. The respondent preferred an appeal G
under Section 38 of the Act. By order dated 12.4.2001, the Rent Control
Tribunal directed the eviction of the respondent to remain stayed but subject
to the condition that the respondent shall deposit in the Court Rs.15,000 per
.
.~
month, in addition to the contractual rent which may be paid directly to the
appellant. The deposits were permitted to be made either in cash or by way H
848 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A of fixed deposits in the name of the appellant and directed to be retained
with the Court and not permitted to be withdrawn by either party until the
appeal was finally decided. Raising a plea that the respondent could not have
been directed during the pendency of the proceedings at any stage to pay
or tender to the landlord or deposit in the Court any amount in excess of
the contractual rate of rent, the respondent filed a petition under Article 227
B
of the Constitution putting in issue the condition as to deposit Rs.15,000 per
month imposed by the Tribunal. By order dated 12.2.2002, which is hn-
pugned herein, the learned single Judge of the High Court has allowed the
petition and set aside the said condition imposed by the Tribunal. The effect
of the order of the High Court is that during the pendency of appeal before
C the Tribunal the respondent shall continue to remain in occupation of the
premises subject to payment of an amount equivalent to the contractual rate
of rent. Feeling aggrieved, the landlord (appellant) has filed this appeal by
special leave.

D Ordinarily this Court does not interfere with discretionary orders, more
so when they are of interim nature, passed by the High Court or subordinate
Courts/Tribunals. However, this appeal raises an issue of frequent recur-
rence and, therefore, we have heard the learned counsel for the parties at
length. Landlord-tenant litigation constitutes a large chunk of litigation
pending in the Courts and Tribunals. The litigation goes on for unreasonable
E length of time and the tenants in possession of the premises do not miss any
opportunity of filing appeals or revisions so long as they can thereby afford
to perpetuate the life oflitigation and continue in occupation of the premises.
If the plea raised by the learned senior counsel for the respondent was to
be accepted, the tenant, in spite of having lost at the end, does not loose
F anything and rather stands to gain as he has enjoyed the use and occupation
of the premises, earned as well a lot from the premises if they are non-
residential in nature and all that he is held liable to pay_ is damages for use
and occupation at the same rate at which he would have paid even otherwise
by way of rent and a little amount of costs which is generally insignificant.

G Shri K. Ramamurthy, the learned senior counsel for the appellant
submitted that once a decree or order for eviction has been passed, the tenant
is liable to be evicted and if he files an appeal or revision and opts for
retaining use and occupation of the premises, he should be prepared to
compensate the landlord by paying such amount as the landlord would have
H been able to earn in the event of the premises being vacated and, therefore,
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.] 849

the superior court, passing an order of stay, acts well within its discretionary A
jurisdiction by putting on terms the appellant who seeks an order of stay.
On the other hand, Shri Ranjit Kumar, the learned senior counsel appearing
for the respondent, defended the order of the High Court by raising several
pleas noticed shortly hereinafter.
B
The order of eviction passed by Rent Controller is appealable to the
Rent Control Tribunal under Section 38 of the Act. There is no specific
provision in the Act conferring power on the Tribunal to grant stay on the
execution of the order of eviction passed by the Controller, but sub-Section
(3) of Section 38 confers the Tribunal with all the powers vested in a Court
under the Code of Civil Procedure, 1908 while hearing an appeal. The
c
provision empowers the Tribunal to pass an order of stay by reference to
Rule 5 of Order 41 of the Code of Civil Procedure 1908 (hereinafter 'the
Code', for short). This position was not disputed by the learned senior
counsel appearing for either of the parties.
D
Sub-Rule (I) and (3) of Rule 5 of Order 41 of the Code read as under:-

"R.5 Stay by Appellate Court

(I) An appeal shall not operate as a stay of proceedings under E
a decree or order appealed from except so far as the Appellate Court
may order, nor shall execution of a decree be stayed by reason only
of an appeal having been preferred from the decree; but the Ap-
pellate Court may for sufficient cause order stay of execution of
such decree.
F
Xxx xxx xxx xxx

(3) No order for stay of execution shall be made under sub-
rule (1) or sub-rule (2) unless the court making it is satisfied -
G
(a) that substantial loss may result to the party applying for stay
of execution unless the order is made;

(b) that the application has been made without unreasonable delay;
and
H
850 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A ( c) that security has been given by the applicant for the due
performance of such decree or order as may ultimately be
binding upon him.

xxx xxx xxx xxx"
B
It is well ~ettled that mere preferring of an appeal does not operate as
stay on the decree or order appealed against nor on the proceedings in the
court below. A prayer for the grant of stay of proceedings or on the
execution of decree or order appealed against has to be specifically made
to the appellate Court and the appellate Court has discretion to grant an order
c of stay or to refuse the same. The only guiding factor, indicated in the Rule
5 aforesaid, is the existence of sufficient cause in favour of the appellant
on the availability of which the appellate Court would be inclined to pass
an order of stay. Experience shows that the principal consideration which
prevails with the appellate Court is that in spite of the appeal having been
D entertained for hearing by the appellate Court, the appellant may not be
deprived of the fruits of his success in the event of the appeal being allowed.
This consideration is pitted and weighed against the other paramount con-
sideration: why should a party having succeeded from the Court below be
deprived of the fruits of the decree or order in his hands merely because
the defeated party has chosen to invoke the jurisdiction of a superior forum.
E Still the question which the Court dealing with a prayer for the grant of stay
asks to itself is: Why the status quo prevailing on the date of the decree and/
or the date of making of the application for stay be not allowed to continue
by granting stay, and not the question why the stay should be granted.

F Dispossession, during the pendency of an appeal of a party in posses-
sion, is generally considered to be 'substantial loss' to the party applying
for stay of execution within the meaning of clause (a) of sub-rule (3) of Rule
5 of Order 41 of the Code. Clause (c) of the same provision mandates
security for the due performance of the decree or order as may ultimately
be passed being furnished by the applicant for stay as a condition precedent
G to the grant of order of stay. However, this is not the only condition which
the appellate Court can impose. The power to grant stay is discretionary and
flows from the jurisdiction conferred on an appellate Court which is equi-
table in nature. To secure an order of stay merely by preferring an appeal
is not the statutory right conferred on the appellant. So also, an appellate
H Court is not ordained to grant an order of stay merely because an appeal
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.] 851

has been preferred and an application for an order of stay has been made. A
Therefore, an applicant for order of stay must do equity for seeking equity.
Depending on the facts and circumstances of a given case an appellate Court,
while passing an order of stay, may put the parties on such terms the
enforcement whereof would satisfy the demand for justice of the party found
successful at the end of the appeal. In South Eastern Coalfields Ltd. v. State B
of M.P. & Ors., [2003] 8 SCC 648, this Court while dealing with interim
orders granted in favour of any party to litigation for the purpose of extend-
ing protection to it, effective during the pendency of the proceedings, has
held that such interim orders, passed at an interim stage, stand reversed in
the event of the final decision going against the party successful in securing
interim orders in its favour; and the successful party at the end would be c
justified in demanding compensation and being placed in the same situation
in which it would have been ifthe interim order would not have been passed
against it. The successful party can demand (a) the delivery to it of benefit
earned by the opposite party under the interim order of the High ·court, or
(b) compensation for what it has lost, and to grant such relief is the inherent D
jurisdiction of the Court. In our opinion, while granting an order of stay
under Order 41 Rule 5 of the CPC, the appellate court does have jurisdiction
to put the party seeking stay order on such terms as would reasonably
compensate the party successful at the end of the appeal in so far as those
proceedings are concerned. Thus, for example, though a decree for payment
of money is not ordinarily stayed by the appellate Court, yet, if it exercises E
its jurisdiction to grant stay in an exceptional case it may direct the appellant
to make payment of the decretal amount with interest as a c"ondition prec-
edent to the grant of stay, though the decree under appeal does not make
provision for payment of interest by the judgment-debtor to the decree-
holder. Robust commonsense, common knowledge of human affairs and F
events gained by judicial experience and judicially noticeable facts, over
and above the material available on record - all these provide useful inputs
as relevant facts for exercise of discretion while passing an order and
formulating the terms to put the parties on. After all, in the words of Chief
Justice Chandrachud, speaking for the Constitution Bench in Olga Tellis and G
,. Ors. v. Bombay Municipal Corporation and Ors., [1985] 3 SCC 545, -
"commonsense which is a cluster of life's experiences, is often more de-
pendable than the rival facts presented by warring litigants".

Shri Ranjit Kumar, the learned senior counsel for the respondent,
submitted that during the pendency of the appeal the tenant-appellant cannot H
852 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A be directed to pay any amount over and above the amount of contractual
rent unless and until the decree or order of eviction has achieved a finality
because, in view of the protection ofrent control legislation enjoyed by the
tenant, he shall continue to remain a tenant and would not become a person
in unlawful possession of the property until the decree has achieved a
B finality from the highest forum upto which the litigation is pursued. Reliance
was placed on the decision of this Court in Smt. Chander Kali Bai & Ors.
v. Shri Jagdish Singh Thakur & Anr., [ 1977) 4 SCC 402, followed in Vashu
Deo v. Balkishan, [2002) 2 SCC 50. This submission raises the following
two issues:- (i) in respect of premises enjoying the protection ofrent control
legislation, when does the tenancy terminate; and (ii) upto what point of time
c the tenant is liable to pay rent at the contractual rate and when does he
become liable to pay to the landlord compensation for use and occupation
of the tenancy premises unbound by the contractual rate of rent?

Under the general law, and in cases where the tenancy is governed only
D by the provisions of Transfer of Property Act, 1882, once the tenancy comes
to an end by determination of lease under Section 111 of the Transfer of
Property Act, the right of the tenant to continue in possession of the premises
comes to an end and for any period thereafter, for which he continues to
occupy the premises, he becomes liable to pay damages for use and occu-
pation at the rate at which the landlord could have let out the premises on
E being vacated by the tenant. In the case of Chander Kali Bai & Ors, (supra)
··-
the tenancy premises were situated in the State of Madhya Pradesh and the
provisions of the M.P. Accommodation Control Act, 19(il applied. The suit
for eviction was filed on 8th March 1973 after serving a notice on the tenant
terminating the contractual tenancy w.e.f. 3 lst December 1972. The suit
F came to be dismissed by the trial Court but decreed in first appeal decided
on I Ith August, 1975. One of the submissions made in this Court on behalf
of the tenant-appellant was that no damages from the date of termination
of the contractual tenancy could be awarded; the damages could be awarded
only from the date when an eviction decree was passed. This Court took into
G consideration the definition of tenant as contained in Section 2(i) of the M.P.
Act which included "any person continuing in possession after the termi-
nation of his tenancy" but did not include "any person against whom any
order or decree for eviction has been made". The court, persuaded by the
said definition, held that a person continuing in possession of the accom-
modation even after the termination of his contractual tenancy is a tenant
H within the meaning of the M.P. Act and on such termination his possession
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.) 853

does not become wrongful until and unless a decree for eviction is passed. A
However, the Court specifically ruled that the tenant continuing in posses-
sion even after the passing of the decree became a wrongful occupant of
the accommodation. In conclusion the Court held that the tenant was not
liable to pay any damages or mesne profits for the period commencing from
1st January 1973 and ending on 10th August 1975 but he remained liable B
to pay damages or mesne profits from 1 lth August 1975 until the delivery
of the vacant possession of the accommodation. During the course of its
decision this Court referred to a decision of Madhya Pradesh High Court
in Kikabhai Abdul Hussain v. Kamlakar, (1974) MPLJ 485, wherein the
High Court had held that if a person continues to be in occupation after the
termination of the contractual tenancy then on the passing of the decree for C
eviction he becomes a wrongful occupant of the accommodation since the
date of termination. This Court opined that what was held by the Madhya
Pradesh High Court seemed to be a theory akin to the theory of "relation
back" on. the reasoning that on the passing of a decree for possession, the
tenant's possession would become unlawful not from the date of the decree D
but from the date of the termination of the contractual tenancy itself. It is
noteworthy that this Court has not disapproved the decision of the Madhya
Pradesh High Court in Kikabhai Abdul Hussain's case but distinguished it
by observing that the law laid down in Kikabhai Abdul Hussain's case was
not applicable to the case before it in view of the definition of 'tenant' as
contained in the M.P. Act and the provisions which came up for considera- E
tion of the High Court in Kikabhai Abdul Hussain's case were different.

Reliance, by the learned counsel for the respondent, on the case of
Vashu Deo (supra) is misconceived, inasmuch as, in that case the Court was
dealing with the rule of estoppel of tenant for holding that the tenant was F
estopped from disputing the title of his landlord so long as he continued in
possession of the tenancy premises and until he had restored the landlord
into possession.

In Shyam Sharan v. Sheoji Bhai & Anr., [1977] 4 SCC 393, this Court
has upheld the principle that the tenant continuing in occupation of the G
tenancy premises after the termination of tenancy is an unauthorized and
wrongful occupant and a decree for damages or mesne profits can be passed
for the period of such occupation, till the date he delivers the vacant
possession to the landlord. With advantage and approval, we may refer to
a decision of the Nagpur High Court. In Bhagwandas v. Mst. Kokabai, AIR H
854 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A ( l 953) Nagpur 186, the learned Chief Justice of Nagpur High Court held
that the rent control order, governing the relationship oflandlord and tenant,
has no relevance for determining the question of what should be the measure
of damages which a successful landlord should get from the tenant for being
kept out of the possession and enjoyment of the property. After determina-
B tion of the tenancy, the position of the tenant is akin to that of a trespasser
and he cannot claim that the measure of damages awardable to the landlord
should be kept tagged to the rate of rent payable under the provisions of
the rent control order. If the real value of the property is higher than the
rent earned then the amount of compensation for continued use and occu-
pation of the property by the tenant can be assessed at the higher value. We
c find ourselves in agreement with the view taken by the Nagpur High Court.

Placing reliance on the decision of this Court in Kunhayammed & Ors.
v. State ofKera/a & Anr., [2000] 6 SCC 359, Shri Ranjit Kumar, the learned
senior counsel submitted that the decree of trial Court merges in the decree
D of the appellate Court and, therefore, the tenant shall continue to remain a
tenant (and shall not become an unlawful occupant), until the passing of
decree by the highest Court because the decree would achieve a finality only
when the proceedings have finally terminated and then the decree of trial
Court shall stand merged in the decree of the appellate Court, the date
whereof only would be relevant for determining the nature of occupation
E of the tenant. We are not impressed.

In Kunhayammed & Ors. (supra), this Court, on an elaborate discussion
of the available authorities, held that once the superior Court has disposed
of the !is before it either way, i.e. whether the decree or order under appeal
F is set aside or modified or simply confirmed, it is the decree or order of the
superior Court, Tribunal or authority which is the final, binding and opera-
tive decree or order wherein merges the decree or order passed by the court,
tribunal or the authority below. However, this Court has also observed that
the doctrine of merger is not of universal or unlimited application. In spite
of merger the actual fact would remain that it was the decree or order
G appealed against which had directed the termination of tenancy with effect
from which date the tena11t had ceased to be the tenant, and the obligation
of the tenant to deliver possession over the tenancy premises came into
operation though the same remained suspended because of the order of stay.

H We are, therefore, of the opinion that the tenant having suffered a
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.] 855

decree or order for eviction may continue his fight before the superior forum A
btit, on the termination of the proceedings and the decree or order of eviction
first passed having been maintained, the tenancy would stand terminated
with effect from the date of the decree passed by the lower forum. In the
case of premises governed by rent control legislation, the decree of eviction
on being affirmed, would be determinative of the date of termination of B
tenancy and the decree of affirmation passed by the superior forum at any
subsequent stage or date, would not, by reference to the doctrine of merger
have the effect of postponing the date of termination of tenancy.

In the Delhi Rent Control Act 1958, the definition of 'a tenant' is
contained in clause (1) of Section 2. Tenant includes 'any person continuing C
in possession after the termination of his tenancy' and does not include 'any
person against whom an order or decree for eviction has been made'. This
definition is identical with the definition of tenant dealt with by this Court
in Chander Kali Bai & Ors. case (supra). The tenant-respondent herein
having suffered an order for eviction on 19.3.2001, his tenancy would be D
deemed to have come to an end with effect from that date and he shall
become an unauthorized occupant. It would not make any difference if the
order of eviction has been put in issue in appeal or revision and is confirmed
by the superior forum at a latter date. The date of termination of tenancy
would not be postponed by reference to the doctrine of merger.
E
That apart, it is to be noted that the appellate Court while exercising
jurisdiction under Order 41 Rule 5 of the Code did have power to put the
tenant-appellant on terms. The tenant having suffered an order for eviction
must comply and vacate the premises. His right of appeal is statutory but
his prayer for grant of stay is dealt with in exercise of equitable discretionary F
jurisdiction of the appellate Court. While ordering stay the appellate Court
has to be alive to the fact that it is depriving the successful landlord of the
fruits of the decree and is postponing the execution of the order for eviction.
There is every justification for the appellate Court to put the tenant-appellant
on terms and direct the appellant to compensate the landlord by payment
of a reasonable amount which is not necessarily the same as the contractual G
rate of rent. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd. &
Anr., [ 1999] 2 SCC 325, this Court has held that once a decree for possession
has been passed and execution is delayed depriving the judgment-creditor
of the fruits of decree, it is necessary for the Court to pass appropriate orders
so that reasonable mesne profits which may be equivalent fo the market rent H
856 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A is paid by a person who is holding over the property.

To sum up, our conclusions are:-

(1) while passing an order of stay under Rule 5 of Order 41 of the Code
"
of Civil Procedure, 1908, the appellate Court does have jurisdiction to
B
put the applicant on such reasonable terms as would in its opinion
reasonably compensate the decree-holder for loss occasioned by delay
in execution of decree by the grant of stay order, in the event of the
appeal being dismissed and in so far as those proceedings are con-
cerned. Such terms, needless to say, shall be reasonable;
c
(2) in case of premises governed by the provisions of the Delhi Rent
Control Act, 1958, in view of the definition of tenant contained in
clause (1) of Section 2 of the Act, the tenancy does not stand terminated
merely by its termination under the general law; it terminates with the
D passing of the decree for eviction. With effect from that date, the tenant
is liable to pay mesne profits or compensation for use and occupation
of the premises at the same rate at which the landlord would have been
able to let out the premises and earn rent if the tenant would have
vacated the premises. The landlord is not bound by the contractual rate
of rent effective for the period preceding the date of the decree;
E
(3) the doctrine of merger does not have the effect of postprining the date
of termination of tenancy merely because the decree of€viction stands
merged in the decree passed by the superior forum at a latter date.

F In the case at hand, it has to be borne in mind that the tenant has been
paying Rs.3 7 l .90p. rent of the premises since 1944. The value of real estate
and rent rates have skyrocketed since that day. The premises are situated
in the prime commercial locality in the heart of Delhi, the capital city. It
was pointed out to the High Court that adjo:ning premises belonging to the
same landlord admeasuring 2000 sq. ft. have been recently let out on rent
G at the rate of Rs.3,50,000 per month. The Rent Control Tribunal was right
in putting the tenant on term of payment of Rs.15,000 per month as charges
for use and occupation during the pendency of appeal. The Tribunal took
extra care to see that the amount was retained in deposit with it until the
appeal was decided so that the amount in deposit could be disbursed by the
H appellate Court consistently with the opinion formed by it at the end of the
ATMA RAM PROPERTIES v. FEDERAL MOTOR [LAHOTI, CJ.] 857

appeal. No fault can be found with the approach adopted by the Tribunal. A
The High Court has interfered with the impugned order of the Tribunal on
an erroneous assumption that any direction for payment by the tenant to the
landlord of any amount at any rate above the contractual rate of rent could
not have been made. We cannot countenance the view taken by the High
Court. We may place on record that it has not been the case of the tenant- B
respondent before us, nor was it in the High Court, that the amount of
Rs.15,000 assessed by the Rent Control Tribunal was unreasonable or
grossly on the higher side.

For the foregoing reasons, the appeal is allowed. The order of the High
Court is set aside and that of the Tribunal restored with costs incurred in C
the High Court and in this Court. However, the tenant-respondent is allowed
six weeks' time, calculated from today, for making deposits and clearing
the arrears upto the date consistent with the order of the Rent Control
Tribunal.

Appeal allowed.
D
S.K.S.