Tenant liable to compensate for period after occupancy right expires: Supreme Court

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Court has said the very purpose to rent out property is to ensure income and noted that the premises in question was located in the heart of Kolkata

The Supreme Court has said a tenant who once entered a property in question lawfully and continues in its possession after his right to do so stands extinguished, is liable to compensate the landlord for such time period after the right of occupancy expires.

A bench of Justices J K Maheshwari and Sanjay Karol accordingly directed one Ashwini Bhanulal Desai to deposit Rs 5,15,05,512 with the Registry within four weeks, acting on an interlocutory application filed by landlord Bijay Kumar Manish Kumar HUF.

Court also noted that the location of demised premises is in the heart of Kolkata and if the submissions of the petitioner were to be believed, they had been deprived of rent for a considerable period of time. 

"Taking a lock stock and barrel view of the present dispute, the averments and the documents placed before us, we may record a prima facie view, that the respondent-tenant has for the reasons yet undemonstrated, been delaying the payment of rent and/or other dues, payable to the petitioner-applicant landlord. This denial of monetary benefits accruing from the property, when viewed in terms of the unchallenged market report forming part of the record is undoubtedly substantial and as such, subject to just exceptions, we pass this order for deposit of the amount claimed by the petitioner-applicant, to ensure complete justice inter se the parties," the bench said.

The division bench added that it could not lose sight of the fact that the very purpose for which a property is rented out, is to ensure that the landlord by way of the property is able to secure some income. "If the income remains static over a long period of time or in certain cases, as in the present case, yields no income, then such a landlord would be within his rights, subject of course, to the agreement with their tenant, to be aggrieved by the same," it added.

The matter stemmed from a special leave petition challenging the Calcutta High Court's judgment, which held that the West Bengal Tenancy Act, 1997 would apply in the matter instead of Transfer of Property Act, 1882 with regard to prime commercial property in Kolkata's Dalhousie area.

Lease agreement inter se the parties was entered into on February 23, 1991 executed by the predecessor-in-interest of the petitioner. It was alleged that the respondent has been in default on payment of rent since 2002 and in default on payment of his share of municipal tax since 1996.

On account of non-payment of rent, the lease was forfeited/determined. However, the respondent had neither delivered the possession of the property nor paid the rent. It was the tenant's case that since no court had declared the end of the landlord-tenant relationship, the landlord asking to pay occupational charges as opposed to contractual rent would amount to the re-writing of the tenancy agreement.

He also argued that occupation charges were only payable after the lease was validly determined or after the decree of eviction. Since both these eventualities were yet to occur, no question of such payment arises, court was told.

Referring to several judgements, the bench said mesne profits became payable on continuation of possession after ‘expiry’ of lease. Thus, the respondent-tenant has been asked to deposit the money with the Registry, failing which would entail all consequences within the law, including willful disobedience of the order. 

Case Title: Bijay Kumar Manish Kumar HUF vs. Ashwini Bhanulal Desai